Natural gas crisis 2021, economic collapse 2021, Commodities live trading
European gas prices are breaking one record after another, launching the anxiety for the energy efficiency of the Old Continent in view of the winter of 2021.
This agony started in the summer, when last winter the stocks in the warehouses were exhausted, as a result of which they recorded the lowest level of the decade.
However, the reduced stocks “clasped” with a set of factors, which further contributed to the increase in prices. The increased demand as the economies from the lockdowns returned but also due to the high temperatures that developed this summer, the reduced efficiency of the wind due to apnea, the maintenance works and a fire that broke out in August in Russian infrastructure, were just some of them.
Concerned that Europe may not have enough gas supplies for the coming winter, Europe has called early for increased supplies from its number one supplier, Gazprom. But the Russian market leader did not respond, diverting liquefied fuel shipments to Asia. The result was a spike in prices.
How far can US support go?
On the side of Europe stands the International Energy Agency – IEA – which a few days ago called on Russia to send more natural gas to Europe, but also the US Secretary of Energy, who “waved” her finger at Russia stating:
“We and our allies are ready to stand tall where there are players who can manipulate the offer for their own benefit … We are taking the matter very seriously and we are on the side of our European allies to ensure an uninterrupted and adequate supply of gas for the winter ».
But can the US put an adequate energy back in Europe?
Many support this view, referring to the period from October 2018 to January 2019, when LNG loads – liquefied natural gas – from the US to Europe amounted to 3.23 million tons compared to 700,000 tons in the same period last year. In terms of LNG at the time, the US was the second largest supplier in Europe after Qatar, according to Refinitiv Eikon.
But let us not forget that Asian prices had fallen at that time due to lower-than-expected demand – high stocks in China plus a 10% tariff on imports, in the context of the trade war with the US – with the result that US companies turned to Europe where gas orders exceeded those usually made in the Mexican and South Korean markets at this time of year.
However, the current conditions are completely different with the Asian demand being increased and the absorption prices being very high.
It will therefore be of increasing interest to see how the United States manages its supplies from now on, in order to maintain a balance between the profit margins of American companies and their determination to seize the opportunity and reduce Europe’s energy dependence on Russia.
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