How long will the countries of the Old World last without Russian fuel
Gas prices on the stock exchange in Europe fell below $400 for the first time since July 2021. Prices collapsed due to warm weather, large supplies and abundant LNG supplies from Qatar and the US. But does this mean that the Old World has overcome the energy crisis? Won't Europeans freeze without Russian gas in a cold winter? What is the reason for the fall in prices and should we expect a new wave of price increase? Experts told MK about this.
“Now prices are falling not only for natural gas, but also for oil, metals and other resources. The reasons for this are that the expectation of a global recession reigns on the stock exchanges. The recently released economic data on China show a slowdown in the global economy, in the United States there is active talk about a possible default on public debt, and California has already announced this default today (the state is unable to pay off its debts to the federal budget). Accordingly, despondency reigns on the world stock exchanges and the prospects look rather gloomy — the cost of resources always reacts negatively to such trends, prices are falling.
All this does not mean that the EU will successfully pass the new winter season or, on the contrary, there will be difficulties. In this case, the cost of resources reflects trends in global demand. And Europe itself is trying to actively replace Russian gas with supplies from other regions (in particular, with the help of LNG from America or Qatar). But now it is the low season for gas, usually in late spring and early summer, quotes fall as much as possible, since one heating season is over, and the filling of underground storage facilities (UGSF) is just beginning. Closer to autumn, it will become clear at what prices Europe will buy gas and how difficult the winter will be for the Old World.
“Since the EU has completely replaced natural gas from Russia, including including with the help of LNG from the USA and Asia, then Europe most likely will not freeze. In any case, in our opinion, the EU energy crisis no longer threatens, as the market has completely reoriented itself to other suppliers. Seasonal increases in natural gas prices closer to winter are also possible. But due to the warm winter, most of the reserves in UGS facilities were saved. The trend reversal in the EU gas market took place back in September-October 2022 and was caused by the liquidation of futures positions after the end of the panic around the energy crisis.