European Natural Gas Prices Approach Record High Peak

Natural gas prices in Europe reached a new high over supplies from Russia. Meanwhile, equities rose on the night Federal Reserve Chair Jerome Powell delivered his key speech.

European benchmark, Dutch TTF gas contract went up to 322 euros per megawatt hour, which is close to March’s record of 345 euros after Russia invaded Ukraine.

Prices have gone up recently in light of the three-day halt in German deliveries from Russia via Nord Stream 1 pipeline.

Simultaneously, one-year forward contracts for electricity prices in Germany and France significantly increased to record highs due to fears of a winter energy crunch.

Hargreaves Lansdown Analyst Susannah Streeter, said that “Gas is on a seemingly unstoppable march upwards again, a dramatic move which will intensify the energy crisis,”

“Already plans are being brought in to save energy which will darken streets across Germany and make public buildings colder, but much tougher measures may have to be enforced given dwindling gas reserves.”

In the stock market, the majority of European equities advanced with news that the German economy expanded by 0.1% in Q2 which is an upgrade from the then projection of zero growth.

“I’m trying to find a reason to be optimistic on the back of that, but in reality, it just means the economy may take a little longer to fall into recession,” says OANDA analyst Craig Erlam.

“With the energy crisis unlikely to improve, this likely means another quarter of flat growth at best before the economy falls into recession later this year.”

Source: Inquirer