European gas prices hit a wave of sharp rises after a German decision to lift the state of emergency to face the imminent possibility of a complete interruption of Russian gas supplies.
According to the data of the TTF index on the ICE London Stock Exchange today, Thursday, the price of spot gas contracts jumped to the level of 1500 dollars per thousand cubic meters, for the first time since March of this year.
And the TTF index revealed on the ICE Stock Exchange, the nearest futures contract for July 2022 was traded at the level of $ 1504 per thousand cubic meters of gas, and the contracts closed yesterday at $1,368.
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A short while ago, German Economy Minister Robert Habeck announced that the country would move to the second level of its three-phase emergency plan to confront the gas crisis.
According to Habeck’s statements, this means that Europe’s largest economy is now witnessing risks in the event of a continuing lack of gas supplies in the long term, which may lead it to ignore the old continent’s goals of eradicating the coal age again.
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According to Germany’s emergency gas plan, the alert level is raised when there are interruptions in gas flows or exceptionally high gas demand leading to a significant deterioration in supply.
A few days ago, Germany announced resorting to an emergency plan and operating the country’s largest coal plant to generate power, in conjunction with Russian decisions to cut gas from many European companies and countries, the latest of which was Nord Stream.
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Prices of gas futures contracts in Europe on March 4 jumped 30% and broke the record high of $2,400 per thousand cubic metres, according to the ICE Stock Exchange in London.
Gas prices in Europe have shown strong fluctuations in recent days and have risen sharply since Russia launched a special military operation against Ukraine on February 24. Last year, the price of European gas fluctuated near an average in the range of 250 to 300 dollars per thousand cubic meters, during a period Spring 2021.
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At the end of the summer of 2021, the value of spot contracts with next day delivery exceeded $600, and in early October, prices reached $1,000.
This increase in prices is attributed to several factors, including high demand for liquefied natural gas in Asia, limited supply from major suppliers, and low occupancy levels in European storage, coinciding with the faltering Russian supplies.
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International Energy Warning
Fatih Birol, head of the International Energy Agency, said emergency measures taken by European countries this week to reduce gas demand, such as operating old coal-fired power plants, were justified by the scale of the crisis despite concerns about an increase in carbon.
Birol warned that the steps European governments have taken so far will likely not be enough if Russian exports are completely cut off, and Birol added that countries should do everything they can to maintain supplies for now to ensure stocks are full before the winter months.
Italian Energy Minister Roberto Singolani said that the Italian proposal to set maximum limits for natural gas prices in the European Union is gaining increasing support from the EU countries, as many countries see it as the “only solution” to stop the price hike.
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