Energy Market Highlights:
- The EU power prices declined this week, driven by the bearish fundamentals on the gas market. TTF Cal24 price fell to the level before the war in Ukraine.
- CO2 Carbon prices hit an all-time high at 100 EUR/tonne, mainly driven by speculative interest and strong technical signals.
- China’s LNG demand may return to the historical level as the country reopens after the Covid-19 shutdown.
- The gas storage levels across the EU stood at 63% full capacity. However, Europe must further decrease the demand for gas while maintaining high levels of LNG imports to meet next winter’s storage targets. To ensure supply security, the EU has mandated that storage facilities be filled to at least 90% capacity by 1 November.
- According to economy minister Robert Habeck, Germany plans to put out tenders for 25 GW worth of gas-fired units starting this year to be available by 2030.
- Spain and Portugal asked the EU commission to extend the Iberian gas price cap until Dec 2024. There is a high probability that the cap will be prolonged until at least Dec 2023.
- Overall, the market fundamentals remain risky, and there are a lot of uncertainties around the below questions:
- One of the warmest winters on record. Europe was lucky this winter due to the mild weather. But what if the next one turns out to be colder?
- Ukraine gas pipe is still in operation. Will it continue in 2023?
- We have more dependencies on LNG, but there’s a limit on how much the EU can take. Will Asian markets outcompete Europe in 2023?
- Therefore, considering the latest market developments, uncertainties and risks, it is recommended to explore hedging options to secure energy needs for Cal2023-25.
To read the prior week’s European Energy Market Update, please follow the link here.
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