The gas price in the United States has taken a significant step down. Remarkable, because in Europe the price remains stable. A combination of the small stocks, the disappointing supply and the fear of a cold winter ensure that the prices here do not fall. The smiling third is Gazprom, which has benefited from good demand.
The price of gas has taken a considerable step downwards. On Friday, November 26, the NYMEX quotation was at $5,55 per MMBtu, but on Wednesday, December 1, it is still 'only' $4,40 per MMBtu. This puts the price at its lowest point since August. Analysts see several causes for the sharp decline: speculators have cashed in their profits, demand is declining due to relatively mild weather in the United States, the new variant of the coronavirus is causing unrest on the market and the extraction of natural gas is above average in the United States .
As reported, there has been no price drop in Europe. Here prices remain around €90 per MWh (approximately $30 per MMBtu). The reason for the still high price is the disappointing supply and the cold weather predicted by meteorologists for the first half of December. According to data from Gas Infrastucture Europe, the filling rate of gas storage facilities in the European Union and the United Kingdom is 68,5% on November 29. For comparison, a year ago the filling rate was 89%. That is an important factor, according to analysts. Supplies are relatively low and gas companies are unable to replenish them, in fact they are already being drawn from stocks from time to time.
If the winter is significantly colder than 'normal' - that chance is estimated at 10% to 15% - then stocks could drop to an unprecedented low level. Another major player on the international gas market is Asia. Analysts there expect a cold winter. The phenomenon 'La Niña' is correlated with the course of winter in North Asia and usually causes relatively severe winters in China, Japan and South Korea. The doomsday scenario hanging over the market is a cold winter in both the European Union and Asia. Current gas production is insufficient to serve both markets. New records on the international gas market cannot be ruled out.
Gazprom benefits
The high gas price is not doing any harm to Russian Gazprom. The company achieved a record profit of $7,8 billion, Gazprom announced on Monday, November 29, when presenting its third quarter figures. The average gas price in the past quarter was about three times higher than the same period a year ago. For the fourth quarter, Gazprom expects that profits will be even higher due to the tightness on the European market.
Criticism from politicians - that Gazprom is doing too little to increase production and normalize the European energy market - is waved away by the company. According to the Russian Gazprom, all contractual obligations are being properly fulfilled, the company told Reuters.