Record European gas prices again

On the Dutch futures market – the European reference – the price of natural gas for September delivery at the closing bell on Thursday was €321.41 per megawatt-hour, up 10 per cent from the record high set on Wednesday. The price reached an absolute peak of 345 euros per megawatt-hour during March 7 trading (227 euros at the closing bell).

Gas prices were driven by shortage fears, driven in part by planned maintenance of Nord Stream 1. As a result, the gas pipeline between Russia and Europe will be out of service for three days. There are concerns that the leadership could be out of action for longer than announced, further endangering European supplies.

Meanwhile, Russia’s state-owned Gazprom has been pumping only about 20 percent of its maximum gas capacity through Nord Stream for weeks. Europe suspects Russia is artificially keeping supplies low in response to European sanctions. The fact that French energy giant EDF is struggling with crippled nuclear reactors doesn’t help either. As a result, the demand for electricity from gas-fired power plants is rising and electricity prices are rising.

Prime Minister Alexandre de Croo (Open VLD) warned this week that the energy crisis will continue “through five to ten winters”. “The coming months are going to be tough, and the next winter is going to be tough. You have to count on that,” he said. Markets expect energy prices to fall somewhat in a few years.