While prices dropped to 320p per therm on the UK Natural Gas Futures on Friday morning, the benchmark remains ahead of Asia’s LNG.
Nathan Piper, Head of oil & gas research at Investec anticipated that gas prices would remain high as economies recover from the pandemic.
- We believe there is a high likelihood of both prolonged and even higher prices through winter with after-effects that could stretch beyond the next two years
Earlier this week, the regulator announced that no decision on certifying the pipeline is expected in the 1st half of next year.
Russia has been accused of putting pressure on Europe by reducing supplies into the continent, in order to get Nord Stream 2 approved, which could reduce Ukraine’s influence in the region.
President Vladimir Putin has dismissed these claims as politically motivated blather.
Investec believed these tensions would inevitably influence prices over winter – while the lack of Nord Stream 2 would continue to limit overall energy supplies.
- We expect political tensions around the Nord Stream 2 start-up will increase as US and EU consider economic sanctions on Russia with repercussions on EU gas supply, increasing UK and EU gas price volatility
The UK reportedly can only store gas 7 days in advance since scrapping its largest rough storage site in Yokrshire.
- Continued higher gas prices will make refilling UK/EU gas storage facilities next summer challenging, and EU gas storage is already at multi-year lows
- High gas prices this summer meant storage was low going into winter, while LNG continued to be exported to Asia. Next summer, the situation could be more acute