Energy Market Highlights:
- European power futures are largely flat this week. Gas storage in Europe is at 91% capacity (+2% compared to last week).
- A change to significantly colder than normal weather is not likely during the remainder of October, as the large-scale weather pattern is very stable.
- Following the EU energy ministers meetings last week, there is still no breakthrough on gas and power price caps, However, it seems that support continues to grow for a price cap on gas used to produce electricity, i.e. the ‘Iberian’ model. If this proposal goes through, wholesale electricity prices will be reduced.
- A follow-up emergency meeting of energy ministers is expected in early November to approve a legislative proposal.
- To phase out Russian gas, analysts predict that Europe would need to purchase about 200 million tonnes of LNG over the next 10 years.
- Oil prices increased this week after OPEC+ announcement to cut production by 2 million bpd.
- One of the remaining operational Russian gas supply channels to Europe might be closed if Moscow follows through on its threat to penalize Ukrainian energy company Naftogaz, worsening the energy situation as the critical winter heating season gets underway.
- Overall, there are still several bullish risks that could lead to higher electricity prices this winter. To learn more about that, please visit this article.
