A higher LNG price will push up the gas price this week. In addition, the price of electricity was also on the rise. Just as gas is becoming more expensive, the share of fuel in the mix has also increased.
The gas market has taken another step upwards after three weeks of relative stability. On Tuesday, July 23, the price of gas was €31,62 per megawatt hour. On Monday, July 29, the price had risen to €33,60, the highest point in a month.
The increase in gas prices is due to the fear of a relatively low supply. The fact that the European supply is far from certain is evident from the volatility of the gas price as soon as minor disruptions occur. The higher price is partly due to a warning from analysts at Energy Aspect Ltd that new disruptions to the Norwegian gas network are imminent.
LNG price up again
In addition, a higher LNG price drives up the gas price. Due to warm weather, the demand for LNG from Asian countries is higher this year than in previous years, which resulted in rising LNG prices. Because the liquefied gas market is a global market, this also drives up European import prices. However, at the end of last month, the price of LNG started to fall again. On June 25, LNG was trading at $12,74 per Mmbtu. Around July 22, the price stabilized at a level of $12,10 per Mmbtu, but the price is now on the rise again. On July 29, the Asian price of LNG increased to $12,45 per Mmbtu.
The price is being driven up by a disruption to an upload facility of the Australian Ichthys LNG. The market expects that the disruption will last some time. This puts pressure on global supply. The disruption has little direct impact on the European market, as Australia mainly supplies Asian markets. However, it does indirectly affect the European gas supply. As the lower supply drives up the Asian LNG price, it becomes more attractive for American LNG ships to shift course. As a result, the European market must increase prices to compete with Asian prices.
Electricity price
Just like last week, the electricity market was once again stable, but on the relatively high side. On Tuesday, July 23, electricity traded for €76 per megawatt hour. The price then fluctuated somewhat, reaching its highest on Friday, July 26. That day, electricity traded for €88,47. The price fell over the weekend. The price reached its lowest point on Sunday, July 28, at €42,89. On Monday, July 29, the price was on the low side, at a quotation of €69,15.
Solar energy was again very dominant, while wind energy production lagged behind. In total, 34,7% of all electricity was generated by solar collectors. The percentage of wind energy, on the other hand, was 16,2%. Since the sun mainly shines during working hours, but does not constantly depress the price, generation from renewable sources in such a pattern ensures relatively low electricity prices during the working day, while electricity is relatively expensive on average.
Higher gas consumption
In addition, lower generation from renewable sources led to a higher electricity price. Last week, 62,8% of all electricity was generated from solar and wind energy. This week, that percentage dropped to 50,9%. Solar energy generation in particular fell sharply. In total, the share of renewable sources fell by 9,2% percentage points. In addition, the generation of renewable energy decreased by 2,5%.
Gas consumption was significantly higher last week than the week before. Last week, 34,7% of all electricity was generated from gas. Last week that was only 26,2%. This clearly had an impact on the market, especially since the gas price also increased. In total, the average daily price of electricity increased from €60,09 to €72,46.