Natural Gas Prices – Complacency?

Take a look at this graph sourced at Reuters

European gas price rally continues on U.S. LNG export, UK power issues

(Bloomberg) –Natural gas prices in Europe continued their record-breaking run as uncertainties about supply security this winter worsen. Power prices also surged to a new high amid after a disruption on a power link with France.

{ UK is an electricity importer, mostly from France.}

The market is super tight so not much needed to move the needle and blow up the market,” Oystein Kalleklev, chief executive officer of shipowner Flex LNG said. The rally has been driven by sentiment around Nord Stream 2 with concerns permitting in Germany will take the process into early next year, “and then we have these tropical storms on top of that disrupting some LNG cargoes in the U.S,” he said.

The Kremlin said a quick start of the Nord Stream 2 link from Russia to Germany would ease the European gas crisis. Russia’s Energy Ministry will present a report on potential exports of gas from oil producer Rosneft PJSC via Nord Stream 2 in the next few days, Interfax reported citing Deputy PM Alexander Novak.

In the UK, low wind output has also increased demand for gas to produce power. Wind generation only accounted for 7.4% of supplies on Wednesday, while gas made up as much as 64% of the UK total, according to National Grid Plc. Potential for wind is seen low for the UK, Germany and Spain for the rest of the week according to a note from forecaster The Weather Co.

In a fresh blow to the tight energy markets, a large fire at a key electricity converter station in the UK has shut down a major cable that brings power from France, worsening Britain’s energy crunch. Gas and power prices jumped.”

“We are heading to prices levels seen in the Beast from the East, in 2018,” Tom Marzec-Manser, Lead Analyst European Gas&LNG at ICIS, said, referring to a cold blast that paralyzed Europe in later winter 2018. “The gas benchmark forward curve is heading to levels pointing to extreme tightness, the most it has ever experienced since the market liberalization for one day. This is where we are heading at the moment. It is a frightening prospect, because we are still in October.”

{This is because we are dealing with price futures.}

Sourced from Worldoil.com

That is one steep Mike Foxtrotter of a gradient.

Did any of the government get “A” level maths? Methinks, not many.

It would not take much to create the “perfect storm”; a sudden early Arctic blast could really chuck a massive spanner in the works!!!

Already one minister has said people might have to choose between eating and heating, which Boris has countered.

Remove storage capacity, trust free market economics, deal with the fluctuations therein without any damping…genius short term thinking.

It won’t take much for things to go right up the shitter, to be up shit creek, in a barbed wire canoe and without a paddle.

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Propane prices are also on the up but not in such a stratospheric manner, so we should be OK. We have a fixed price contract, so we should probably fill up our tank soon.