Page 9 - FSUOGM Week 40 2021

FSUOGM PERFORMANCE FSUOGM

Europe burns more coal

amid gas price spike

EUROPE THE spike in natural gas prices has led to an by 400,000 barrels per day (bpd) over the next
increase in coal-fired power generation in two quarters, supporting already-high oil prices.
Coal is a cheaper, albeit Europe, despite efforts to combat emissions. Analysts at BCS Global Markets estimate that
dirtier alternative to gas Coal futures contracts for delivery to Rotter- on an energy-equivalent basis, gas is 125% more
right now. dam reached an all-time high of $234 per tonne expensive than oil and 210% more expensive
on October 1, according to trading data cited by than coal.
Russian newspaper Vedomosti. Coal prices have “The demand for coal is responding to the
more than tripled since the start of the year. shortage of gas in the market, and prices may
Fuelling this surge has been an increase coal- have only begun to rise,” the Moscow-based
fired power generation, as energy suppliers brokerage said in a research note on October 4.
switch to the fuel as a cheaper option to natural “Meanwhile, it appears the gas market is hav-
gas. Natural gas futures at the Dutch TTF hub ing trouble finding enough marginal buyers to
are still trading at above $1,100 per 1,000 cubic push into alternative fuels – or to cease activity
metres – the highest level on record – amid a altogether.”
swift demand recovery this year, continued The biggest consumers of coal in Europe are
supply constraints and cold weather. And prices Poland and Germany, followed by Italy, France,
could go higher in the event of a cold winter, the Netherlands and the Czech Republic.
which would also open up the possibility of Europe’s escalating gas supply crunch has also
severe supply shortages. pushed up the price of carbon emissions permits,
To a lesser extent, power generators have also because of energy companies switching to coal.
switched to burning oil, with Norway’s Rystad EU carbon allowances topped €65 ($76) per
Energy estimating last week that if the current tonne last week for the first time on record, while
gap between LNG and oil prices remains as wide allowances under the UK carbon trading system
as it is at present, Asia will boost its oil demand have soared to GBP76 (€88) per tonne. ™

Week 40 06•October•2021 www. NEWSBASE .com P9