Gas prices in Europe soared by 86% amid hot weather

On Thursday, the price of gas in Europe rose to more than $550 per thousand cubic meters, the highest it has been since April.

The temperature is soaring and supply issues are causing quotes to increase.

Prices have increased by over 80% since the start of June.

On Thursday at midday, gas prices in Europe skyrocketed by nearly 30%, reaching a two-and-a-half-month high of just under $560 per thousand cubic meters. This marks the third consecutive day of rising quotes on the ICE Futures platform.

Bloomberg reports that natural gas prices have been rising sharply as a result of prolonged maintenance at gas production facilities. Supplies from Norway are anticipated to be restricted until the middle of July due to technical work.

The hot weather on the continent has caused concern about the supply of blue fuel and has forced consumers to use air conditioners to cool the air in their homes.

The probability of drought is rising, which can lead to issues with hydropower, overburden transport systems, and cause fluctuations in the prices of energy and commodities.

In the first months of the year, the market situation was drastically different due to a decrease in industrial demand for gas, resulting in a considerable decrease in prices. By early June, prices had dropped to the lowest levels of 2021, just above 250 USD per thousand cubic meters.

It appears that the market is still sensitive to supply pressures, even though industrial demand is low and fuel reserves in Europe are high, due to the sharp increase in gas prices.

Last summer, Europe was hit with heat waves and droughts, resulting in a surge in demand for gas and a subsequent rise in prices.

Although there is an overabundance of supply on the market and European vaults are full, Promsvyazbank predicts that prices may stabilize in October when the gas withdrawal season begins. This is because a large portion of spot supplies will be sent to Asia, which is a more lucrative market.