Winter is coming: European gas prices soar as demand peaks

Natural gas prices on the European market surged by more than 5% on Monday, hitting nearly $900 per 1,000 cubic meters, according to ICE futures trading data.

The price tag for the October futures contract on the TTF hub in the Netherlands reached $895.30, marking a growth of 5.4% against the levels reached at the end of last week.

European gas prices have been hitting record highs over the past month with the estimated price of October futures reaching a decade high of $963.90 on September 15.

The spike is being attributed to the approaching winter season and economic rebound from Covid-19 lockdowns across the world. This has reportedly boosted demand from households and businesses, while lower investment by global drillers is constraining output.

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Last week, the CEO of Ukrainian state-controlled energy corporation Naftogaz accused Russia’s Gazprom of deliberately withholding gas supplies from Europe, thus manipulating the markets.

The Russian energy corporation says the surge in gas prices are the result of low reserves in European underground storage facilities ahead of the winter season. As of September 19, those reserves were reportedly only 72% full, which is nearly 14% lower than in the past five years.

Earlier this month, Germany’s energy ministry said Russia is fully compliant with its gas supply obligations to Europe, stressing there was no need for the state to intervene in the situation with gas prices.

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