The conflict between Ukraine and Russia is still leaving a strong mark on the European gas market. This creates uncertainty and that is reflected in the price. However, there are also several developments that work in Europe's favour.
The price of gas has taken a step upwards. The TTF quotation has increased from €75,20 per MWh on Thursday, January 20 to €93,58 per MWh on Tuesday, January 25. This put the price at the highest level in two weeks. Gas is well priced compared to the same period last year. Although this level is not close to the peak in December; then €180 per MWh was quoted. On Wednesday, January 26, the price dropped slightly again, to €90,15 per MWh.
The biggest uncertainty in the market is the ongoing tension between Russia and Ukraine. According to experts, there is a real chance that the conflict will get out of hand. This does not necessarily have to be a large-scale invasion by Russia, but could start with a relatively small conflict. Consider, for example, an overenthusiastic soldier who unintentionally fires a grenade across the border. Something like that can have major consequences. This uncertainty is partly factored into the current gas price.
There are also developments underway that will dampen further price increases. Russian gas supplies to Europe are increasing. For example, the supply via Slovakia reached the largest volume since January 1. Although the supply still remains below the multi-year average, it is a break from the trend in recent weeks. Furthermore, the relatively mild weather is favorable for Europe. The demand for gas for heating is therefore lower.
Penalties
However, the threatened sanctions against Russia are hanging over the market. The United States is working on alternatives to Russian gas if the supply to Europe is no longer possible due to sanctions. At the beginning of this week, the White House explored options with American oil and gas producers. Today it was also announced that Qatar - one of the largest LNG producers in the world - wants to come to Europe's aid if the conflict gets out of hand.
Russian President Putin strengthened ties with the Italian business community in a meeting, despite Rome's call for companies not to participate. Utility Enel banks Intessa Sanpaolo and Unicredit and insurer Generali were present, among others. In the digital meeting, Putin emphasized the importance of ties between the Russian energy sector and Italian business, reports Reuters news agency. Putin also said he was satisfied with the cooperation with Italian companies and banks on major projects in the energy sector such as Yamal LNG and Arctic LNG 2.