Oil & Gas News

European Power Declines as Gas Drops on Rising Flows From Russia

European Pipeline

By: Bloomberg – European power prices extended last week’s drop, tracking natural gas futures lower as Russian supplies of the fuel are increasing.

German and French electricity for March slid about 7% each on Monday on the European Energy Exchange AG, adding weight to the notion that the market has moved beyond the worst of the energy crisis.

Traders are keeping a close tab on gas flows to Europe from Russia, which rose again via a route through Ukraine after declining late last week. Sliding gas prices mean lower production costs for power stations using the fuel.

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While next-month power prices have more than halved since reaching record levels in December, they are still much higher than normal and are denting profits at companies across the region. Aurubis AG, Europe’s top copper smelter, warned on Monday that energy costs are mounting.

Source: EEX

German power for March fell 6.7% to 172 euros per megawatt-hour at  12:56 p.m. in Berlin, while the year-ahead price fell as much as 3.1%.

European Gas Falls With Russian Flows Via Ukraine Rising Again

Fabian Ronningen, a power analyst at Rystad Energy AS, attributed most of the bearish moves to the rise in gas flows from Russia. Forecasts for milder weather and increasing wind power output may also weigh on prices.

Output from turbines are poised to exceed 50,000 megawatts by the middle of next week, according to a Bloomberg model. There’s still a high level of uncertainty in forecasts that far in advance. Wind, as well as solar, takes priority on the grid over dirtier and more expensive energy sources such as gas and coal.

  • Bloomberg’s German wind power forecast:

Bloomberg German Wind Power Forecast

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