“European gas market: why summer will be a bigger challenge than winterThe summer period on the European gas market is turning from a traditionally calm one to a high-risk season. Due to reduced
supplies from Russia and geopolitical factors, summer gas prices are higher than winter prices.”, — write: unn.ua
Summer has traditionally been a calm period for the European natural gas market: low heating demand allowed traders to enjoy their holidays and energy companies to carry out seasonal maintenance. However, this stability seems to be a distant reality now.
The sharp decline in gas supplies from Russia in the summer of 2022 caused a historic crisis when European countries were forced to compete with Asia for fuel purchases and resort to government intervention. While this combination of supply risks is unlikely to recur in the near future, the warm season remains a serious challenge.
This month, German operator Trading Hub Europe GmbH said it was considering subsidies to replenish storage, indicating further instability.
Last summer, gas prices fluctuated due to geopolitical risks and hot weather in Asia, but this year’s situation could be even more challenging. European gas reserves depleted faster in winter, and the loss of Russian supplies was exacerbated by the end of the transit agreement with Ukraine.
As a result, summer gas futures are now trading at a premium to winter futures, jeopardizing stock replenishment due to high prices. The Trading Hub’s statement only reinforced this trend. In response to the situation, Italy announced that it would start replenishing its storage facilities before the official start of the storage season.
Germany, as Europe’s largest economy, is actively looking for tools to ensure stable supplies, as its industry still suffers from high energy costs. However, traders fear a repeat of the summer 2022 crisis, when the Trading Hub caused a sharp price spike by following a government order to buy gas at any price.
The situation remains unstable, and even fuel for delivery in the summer of 2026 is trading at a premium to the winter season. If the implementation of global projects is delayed again, as has already happened, the European gas market will only be able to return to stability in a few years.
Recall
In record time, Europe has reduced Russian gas imports by 75%, oil imports by 3%, and coal imports by zero. In February, the EU plans to present a plan for the development of clean energy, including to reduce prices.