Natural Gas: Don’t expect any gifts. The future is not bright

12 February 20222 years ago babelfish

I would like to give you some indication of what you can expect from the natural gas market, that is, what you will pay for the gas itself in the future. First of all, given the Draghi government's decision not to help families with debt and its very little control over energy companies, what will arrive will not be amortized. The decision not to make a budget overrun, not even a minimum, means that what goes into contributions, limited, for the bills is cut to some other chapter, be it health, education, social assistance. A zero-sum game that only helps communication, but which, in reality, does little for the economy. Companies that close in rapid succession are the index. In a few months we will see what remains of the rubble of the Italian production system.

However, we do some evaluations on the expectations of the price of natural gas. TTF forward contracts on the Dutch market are currently stabilizing in the 70 – 80 euro range per megawatt / hour. that is, three times the price that was paid until last May.

What will happen in the rest of 2022-23?

The price expectations on the European market see the classic summer decline with a rebound in October 2022, and then reach new highs, not very dissimilar from the current ones, as you can see. (TTF stands for title transfer facility, i.e. the name of the Dutch gas exchange)

that this is the future that awaits the market is also indicated by the expected prices on the UK futures market.

So the forecasts are simple: the gas market will not resolve its crisis until at least 2023. Additional investments will be needed to bring the now dormant fields into production and increase the production of active ones. Furthermore, geopolitical uncertainties remain, even if Russia is too dependent on gas to be able to afford not to sell it. It will simply sell it, at a lower price, to China and the Far East, but these markets, in turn, will not buy it from the Gulf or Australia, freeing up quotas for Europe. However, there is always the bottleneck of regasification. At this stage we would need some medium-term energy planning, but today we look at it week by week. The medium – long term in the EU is either a blasphemy, or it is the terrain of demagogues.

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The Natural Gas article: don't expect any gifts. The future is not rosy comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gas-naturale-non-aspettatevi-nessun-regalo-il-futuro-non-e-roseo/ on Sat, 12 Feb 2022 11:00:10 +0000.