Energy Market Highlights:
- Power and Gas prices in Europe declined from their peak in Aug’22. German Cal23 baseload power contract felt >50% since then.
- Nevertheless, the power and gas market for the upcoming winter in Europe remains very tight.
- Although the gas storage in Europe is approaching its maximum capacity, i.e. 87% capacity this week, the available capacity in a number of days is still inadequate for the EU to last through the winter.
- The potential for a de-escalation of the war in Ukraine can improve prospects for gas and power markets in Europe. However, the likelihood of this is still rather limited at this point.
- The EU Commission is still considering the possibility of capping gas prices. However, the agreement among the EU member states can take up to several months when the winter will be already started.
- There is still significant upside risk related to the developments around Russian gas supplies, and whether the outlook for nuclear availability in France deteriorates or not.
- Overall, the outlook for this winter remains bullish, especially in the case of cold spells.
To read the prior week’s European Energy Market Update, please follow the link here.
