Page 18 - RusRPTNov22

hitting 16-18C every day, quite warm for the time of year,” BCS GM said in a note.
The downward pressure on gas prices has mounted rapidly. A flotilla of LNG tankers is currently anchored off the EU coast, holding far more gas than the tanks can accommodate. On top of that, European countries have rallied to governments’ calls to decrease consumption, further reducing demand. A Brussels-based think-tank recently estimated the pan-Europe fall in consumption at 7% and in Germany consumption has dropped by an estimated 30%.
Negative gas prices would be a repeat of oil prices that fell to less than zero for the first time ever in April 2020 due to similar bizarre market conditions cause by the coronavirus (COVID-19) and likewise turned the market on its head thanks to a massive slump in demand.
Winter is coming Like oil, gas prices are expected to bounce back dramatically once new demand appears next month. (The Brent oil blend was trading at $92 per barrel at the time of writing, and gas at $1,035 per 1,000 cubic metres.) The fall in gas prices is widely seen as a lull before the storm, as winter is coming, warns Capital Economics.
“The reason for the relative weakness in European gas prices is quite straightforward: seasonal demand has yet to begin its upward climb as warm weather lingers in Europe, while nearly full storage means there are few options for injecting the marginal bit of imported gas,” BCS GM says. “That doesn’t mean that Europe’s energy crisis has been cancelled, or that prices won’t increase soon. Consider this the calm before the storm. Once the weather inevitably begins to cool, we expect prices to begin to rise significantly.”
Cold weather is on its way and when the flows into the EU tanks reverse and gas starts being taken out again prices are expected to jump: gas futures price
18 RUSSIA Country Report November 2022 www.intellinews.com