The gas market cools down, the fear factor declines in international markets

Norbert Rücker, Head of Next Generation Economics and Research at Swiss Bank Julius Baer, ​​discusses the energy sector.

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Things appear to be cooling off in natural gas markets specifically and energy markets in general, according to Norbert Rücker, Head of Next Generation Economics and Research at Swiss Bank Julius Baer. Natural gas prices have plummeted on both sides of the Atlantic, for different reasons.

While mild weather prospects added to price pressure in North America, news of a Temporary increase in Dutch production and a pick-up in Russian flows hampered confidence in Europe. Market self-healing mechanisms have been activated for economic or political reasons and have begun to ease the tension. energy crisis appears to be abating, or at least supply-side fears in commodity markets appear to cool. The prices of Coal both in China as in Europe have dropped around 50% from its highs in early October.

The prices of natural gas have fallen between 30% in Europe and 20% in North America, after experiencing a sharp decline yesterday.

signs of relief

Market fundamentals are showing signs of relief, with China’s domestic coal mining and overseas coal exports picking up. On Tuesday, November 9, the prospects for milder temperatures In North America, news of a temporary increase in production in the field inherited from Dutch Groningen and the news about Russia reserving capacities of additional pipelines to send more gas to Europe hampered confidence in the market.

The energy crisis was a consequence of a recovery v-shaped manufacturing-driven and energy-intensive, the short-term rigidity of current fossil fuel supply chains, and the dynamics, sometimes unleashed by the complexity and interconnections of energy markets.

“We don’t see the intermittency of renewables or the often mentioned climate-related capital constraints contributing significantly to price spikes,” Rücker notes.

“But China’s coal mining restrictions or oil nations supply deal could count as such investment restrictions. Given our expectation of easing coal supply constraints and a partial normalization of Russian gas flows to Europe due to political pressure, we see further downside to natural gas prices.”