Chart of the Week
Since mid-June, gas prices have resumed their upward trend in Europe. One-month delivery contracts rose from 79 EUR/MWh on June 8 to 132 EUR/MWh on June 23. This price is still lower than the previous peak in March 2022, when prices exceeded the EUR 200/MWh threshold shortly after the outbreak of war in Ukraine. However, the current level remains five to ten times higher than in previous years, when prices historically evolved around EUR 15 to 20/MWh.
OUR ANALYSIS
Since the fall of 2021, Europe has remained in an energy crisis. The reduction in Russian gas deliveries to Germany, France and Italy since June 14 comes on top of previous cuts in Bulgaria, Poland, Finland, Denmark and the Netherlands. The continent is also suffering from a drop in US liquefied natural gas (LNG) exports following the fire at the Freeport (Texas) terminal on June 9.
However, Europe is not running out of gas: EU stocks continue to grow, amounting to 609 TWh as of June 21, compared to 295 TWh at the beginning of April and 559 TWh on June 9*. Current stocks are close to the average of the last five years at this time of the year, and higher than last year at the same date. However, the scenario of a gas shortage in Europe next winter is a major fear, particularly in the event of a prolongation of the war in Ukraine. This explains why gas prices in Europe remain five to six times higher than in the United States, for comparable units of measurement and currencies. In the short term, one thing is certain: the recent rise in gas prices will continue to fuel the inflationary loop in Europe.
* Source : GIE AGSI. https://agsi.gie.eu/#/historical/eu
The opinion expressed above is dated June 24, 2022 and is subject to change.
See also: https://latribune.lazardfreresgestion.fr/en/germany-job-vacancies-continue-to-rise-in-may/
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