Weekly energy market price update:
The energy market prices continued to increase this week due to the escalation of the war in Ukraine and the additional sanctions introduced on Russia.
In the two weeks since Russia’s invasion of Ukraine, oil prices have rallied by more than 30$ to top 130$ per barrel as concerns over disruptions to the Russian oil supply mount.
The upside power price risk remains due to the increased volatility in the market. The change is mainly driven by the significant price increase of energy futures. Gas typically sets the wholesale electricity price in European markets. Each €1/MWh movement in gas price moves power by €2/MWh.
Gas flows to Europe at this time remain stable. Should this change, we could foresee further increases.
The European carbon prices plummeted as market speculators and Russian entities continued to liquidate positions amid sanctions. Potential industrial production slowdowns in Europe could add to further bearish pressure on CO2 prices.
In order to limit the market price risks linked to the next Winter period, the EU Commission intends to present by April a legislative proposal requiring underground gas storage across the EU to be filled up to at least 90% of its capacity by 1 October each year.
The meeting that took place between Russian and Ukrainian foreign ministers in Turkey did not yield any agreement on a ceasefire.
To read the prior week’s Energy Market Update, please follow the link here.