The price of natural gas reached its highest level in a year on Thursday in both the United States and Europe. Around 10 p.m. (Paris time), the futures contract on American gas for delivery in December gained 5.10%, to 3.356 dollars, a level unexplored since the beginning of November 2023. European equivalent, the Dutch TTF, considered the benchmark for Old continent, gained 3.22%, to finish at 48.303 euros per megawatt hour (MWh), also a peak for more than a year. This Friday morning, it reached 48.475 euros shortly after 9 a.m.
In the American market, the movement was triggered, according to Masanori Odaka of Rystad Energy, by an update of the weather forecast, which now predicts temperatures below seasonal norms in the Western United States during the first week of December. Previously, the thermometer should fall in the Midwest next week.
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Prices depending on the weather
This sequence will mark a break with a very mild autumn, which depressed the consumption of natural gas, used in particular for heating.
“We finally have some weather support”a constaté Eli Rubin, d’EBW Analytics Group.
Stimulated by this development, the price of natural gas started to rise again and, in doing so, exceeded several technical thresholds. “Many speculators have started to hedge” and to go back to buying after having long bet on a fall in prices, explains Eli Rubin. “Now that prices are much higher, the market is waiting to see how production will react”encouraged by more attractive prices, continues the analyst. Larger volumes would automatically cause prices to fall again.
However, with stocks already at historically high levels, the improvement in prices could only be short-lived if the weather becomes milder again, warns Eli Rubin.
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Geopolitical questions
Unlike oil, natural gas is a highly regionalized market, where prices and variations often differ significantly from one continent to another. The surge in the European TTF is due to the arrival of winter, but above all to the geopolitical context. The Russian gas giant Gazprom notably interrupted its deliveries to Austria last weekend, which is still very dependent on this supplier, amid contractual disputes.
“There is also a renewed tension between Russia and the West on a military level”added Eli Rubin.
Russia launched a ballistic missile designed to carry nuclear warheads on Ukraine on Thursday. And this, in response to the use by Ukraine on Tuesday, for the first time on Russian territory, of long-range American missiles. The Kremlin thus threatened that it would not rule out striking Western countries and that the conflict in Ukraine now had all the appearance of a war. « worldwide ».
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Black gold prices are rising
The geopolitical context also influences the prices of black gold. The price of a barrel of Brent from the North Sea for delivery in January reached 74,66 dollars, shortly before 10 a.m. this Friday morning. The barrel of American West Texas Intermediate (WTI) with the same maturity stood at 70.51 dollars, at the same time.
“Even though the outgoing US president authorized Ukraine to use US missiles to strike Russian territories”Washington probably prohibited him from attacking oil installations, “hence the reluctance of prices to rise more significantly”nuance Tamas Varga, analyst at PVM Energy.
Another factor supporting prices, oil stocks recorded a surprise increase last week in the United States, according to the American Energy Information Agency (EIA) on Wednesday, which also highlighted a drop in the production. Commercial crude reserves increased by 500,000 barrels during the week ended November 15, while analysts expected a slight decline of 85,000 barrels, an increase partly linked to the slowdown in refineries.
However, “the disturbances in Norway”on the Johan Sverdrup oil field, have been resolved and “production (from the Kazakh field) Tengiz should return to full capacity by the weekend”after being slowed down by maintenance work, notes Ole Hvalbye, analyst at SEB.
(With AFP)
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