Too much politics, not enough gas
Dissecting the European energy crunch
European energy prices are going ballistic. Barely a day has gone by this month without wholesale gas and power prices breaking the previous day’s new all-time high. But what is really driving the bull run, what does it mean for decarbonisation, and how is this playing out in the political arena? Energy Flux breaks it all down.
European gas traders have never known anything like it. The Dutch Title Transfer Facility (TTF), the benchmark for north-west European wholesale gas prices, went stratospheric this week.
The Chicago Mercantile Exchange’s October-dated TTF futures contract on NYMEX exploded above €72 per MWh on Wednesday (~$25/MMBtu), having risen almost 10% since the market opened that morning. Month-ahead TTF typically averages ~€15 to €25 per MWh in September.
The TTF forward curve looks bleak over winter. You can’t buy gas for less than €60/MWh until April 2021, when the price drops precipitously to €36/MWh – still well above seasonal highs of rece…