Gas prices are still in rally mode. Under the current conditions, a leading global investment bank’s forecast that the price of natural gas could double by the end of winter does look so far-fetched. There are several factors underpinning this claim.
On the one hand, due to the last cold winter, natural gas reserves in storage facilities have significantly decreased – a trend that was inevitable. An additional strain on gas storage facilities came from demand amid the economic recovery of European countries after the pandemic. Inventories were expected to be replenished during the summer period, but this plan failed to materialize. To date, natural gas storage facilities are approximately 71-73% full, while the corresponding figure in the year-earlier period stood at about 93%.
The forecasts are calling for a cold winter this year, which means that energy demand will be high. Storage levels will start to be topped up around the end of October, so there is not much time left to fill storage facilities. This factor is pushing prices higher.
Nord Stream 2 is technologically completed, but it will take some time to work out all the nuances of operations between the departments of the European Union and Germany. This means that “blue fuel" will not start flowing quickly along this line.
Spot prices for gas at the Dutch TTF have reached $884 per 1,000 cubic meters despite the fact that a week ago it had already exceeded $720. The next upside target is $920.