Some notes on gas

Last week, I wrote an article saying I was betting that gas prices would fall and the worse is over for Europe’s energy crisis. Electricity prices kept going down even after Russia announced its indefinite closure of Nord Stream. You can see the comparison here, and here.

I am still short a US natural gas derivative. European prices are higher but I believe that eventually, they will converge again. The no gas event is behind us as you can see from this chart. Nord Stream flow had the largest gas volume flow of all Russian gas pipelines in Europe. Gas prices went down last week after the “no gas event” took place.

Meanwhile, in Europe, there are at least 15 new gas terminals being planned or under construction which in total will be able to store 122.6 billion cubic metres of gas.  That’s just around 50 billion short of what we imported from Russia last year.

The other good news is that as of last week, Germany’s gas supply was 85% full, but this will keep the economy only by February. Germany needs to keep constant gas flows to ensure supply and it will most probably be able to manage this. There is a heightened increase in gas imports in Europe from Norway, Qatar and Azerbaijan.

I am speculating that the worse is behind us and that moving forward gas and electricity prices in Europe will go down.

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