Analysts informed about the risk of the negative gas prices in Europe
Short-term European gas prices were predicted to be negative. As in the recent oil situation, there is a likely scenario in which sellers begin to pay buyers to pick up fuel.
- If the offer will remain so high, until it fills the store, at some point we can see the negative, because now there is no sign of relief in terms of demand, - results Reuters words of one of the traders.
Recall that in April the price of May futures for Texas WTI oil fell to negative values. Quotations, however, managed to get in plus the very next day.
Meanwhile, at TTF in the Netherlands, the EU’s largest gas hub, the price of gas dropped to $ 53.7 per thousand cubic meters. This figure is lower than that observed at the end of April, by 20%. Compared with the 2019 figure, it is three times less. Delivery contracts at the end of the week fell even lower - to $ 52 per thousand cubic meters, writes Finanz.
Note that for almost a month, spot gas prices in the European market have been lower than domestic prices in all regions except production ones (Yamal-Nenets and Khanty-Mansi Autonomous Districts, Komi Republic, Tyumen and Kurgan Regions).
- Negative prices are possible if restrictions on logistics or storage of raw materials become especially severe. In principle, this is right now related to the European gas market, RBC reports Craig Pirrong, professor of finance at the University of Houston.
Note that current quotes are significantly lower than the profitability point of Gazprom. The company has only taxes and transportation of every thousand cubic meters of fuel costs at least $ 63.
At the same time, $ 14 per thousand cubic meters is MET, $ 27 is domestic transportation costs, and at least $ 22 is transportation to the European Union via Nord Stream, which is the cheapest route.
Gazprom is forced to trade with a long delay in order to reduce losses. Gas is sold for summer, autumn and next year. And in January-April, shipments to Europe fell by 20%.
New problems in the European gas market of Russia are promised by the plans of Qatar and the United States to increase gas production capacity.