Europe Gas Futures Hint Towards Prolonged Energy Crisis

Europe Gas Futures Hint Towards Prolonged Energy Crisis by Adam Rosen last updated on February 25, 2023

Europe Gas Futures Hint Towards prolonged Energy Crisis

The natural gas prices in Europe will move higher during the rest of 2023, according to the gas futures contracts. That's a sign which tells us that the current energy crisis in Europe is still far from over.

For now, the Dutch futures are hovering around 60 / megawatt-hour, which was only 54 in March. When compared with the average values for this time of the year, it appears that both of these values are elevated.

However, the values of 60 and 54 are still much lower than the record-high prices seen in August!

According to experts, the past tells us that gas price prices can change very quickly depending on the supply situation. For now, the import of LNG and a mild winter is helping the countries to avoid blackouts in the region. In addition, it is also helping the EU countries to avoid the route of energy rationing.

However, the attention is now on the refilling of the energy stockpiles. But this time, there will be no Russia to fill the stockpiles of the EU!

For the weeks ahead, the EU commission will consult with its member states on whether there's a need to prolong the emergency steps or not! As things stand right now, these emergency steps will expire by March's end.

Given the current situation, traders are now looking at the LNG market that will be used to replace the Russian suppliers. This increased reliance on LNG has caused high competition in the Asian region.

According to Henning Gloystein from Eurasia Group, the energy prices will remain high when compared with their previous values before the Ukraine war.

As for future guidance, regasification capacity is something that is receiving a lot of attention in the Netherlands, Italy, and Germany. According to experts, this will help in avoiding the supply shortages of gas in the EU.

However, an increased cost of LNG can lead to energy shortages in some European countries.