Yves right here. Woman Fortune has smiled on Europe, a minimum of so far as fuel costs are involved. As Wolf Richter lists under, many components have damaged their manner, presently taking the strain off what was near universally predicted to be value hell or a minimum of value ache.
Nonetheless, Wolf’s tally omits some key objects:
Europe having loaded up on Russian fuel in 2022
The suspensions of exercise and even closure of amenities in energy-intensive industries, corresponding to BASF’s choice to completely reduce operations at its major plant in Ludwigshafen
China’s cease and go progress beneath Zero Covid, which seems set to stay dampered beneath “Let ‘er rip” (except China proves more proficient at managing a chronically tight labor market than the US)
Borderline recessionary world outlook for 2023. The World Financial institution forecast this year to show the weakest growth since the financial crisis and Covid
In different phrases, Europe could proceed to have favorable fuel costs. However at what price?
By Wolf Richter, editor at Wolf Road. Initially revealed at Wolf Street
The value of Dutch front-month TTF Pure Gasoline Futures – a benchmark for northwest Europe – plunged 15% at the moment to €54.85 per megawatt-hour (MWh), and has now collapsed by 84% from the loopy spike in the summertime of 2022. The value is now again the place it had first been in early September 2021 (information by way of Investing.com):
What spooked the European pure fuel market at the moment into the 15% sell-off had been stories that Chinese language importers of LNG had been making an attempt to divert February and March LNG shipments from China to Europe, as they had been sitting on massive stockpiles of LNG amid dropping costs in China.
There had been fears that the reopening of China’s economic system would put additional pressure on the worldwide LNG markets. Or was that simply hype once more?
In 2022 and into 2023, a number of components got here collectively to avert what had been seen as a probably dreadful vitality disaster:
- Surging provide of LNG from the US and different places all over the world.
- Speedy deployment of floating storage and regasification models (FSRU) in Europe to dump this LNG provide, together with in Germany.
- Pipeline pure fuel from Norway to the remainder of Europe grew by 4% year-over-year in 2022 113 billion cubic meters (Bcm), in keeping with S&P World. Norway is now Europe’s largest provider. Norwegian fuel deliveries to Germany reached historic highs.
- A big-scale effort by households and companies notably in Germany to scale back pure fuel consumption (heating, scorching water), motivated additionally by the massive value will increase of pure fuel.
- A shift in energy manufacturing from pure fuel to different vitality sources, together with coal, additionally motivated by huge value will increase of pure fuel by means of the summer season of 2022.
- A heat winter.
All of this labored collectively to scale back demand for pure fuel and enhance provide to switch pipeline pure fuel from Russia.
Pure fuel storage amenities in Europe are in exceptionally fine condition for this time of the yr. Within the European Union general, storage amenities had been 81.7% full on January 14, in keeping with GIE (Gasoline Infrastructure Europe). That is how the 916 terawatt-hours (TWh) of pure fuel in storage on January 14, compares to the degrees on the identical time of the yr in prior years:
- 76% above 2022
- 32% above 2021
- 1% above 2020
- 30% above 2019
- 44% above 2018
Storage ranges differed by international locations, however all of them had been in nice form, notably in Germany, which has managed to really enhance its storage ranges over the previous few weeks throughout a interval (winter) that may usually be the withdrawal interval. As of January 14, per GIE:
- Germany: 90.5% full
- France: 79.7% full
- Italy: 79.3% full
- Spain: 93.6% full
- Netherlands: 75.8% full
- Poland: 95.6% full
- Sweden: 88.4% full
- Belgium: 88.6% full
- Austria: 87.3% full
- Denmark: 91.5%% full
By way of LNG pricing, the strain has come off too. The value of the Japan Korea Marker (JKM) futures contract, at $26.80 per million Btu has plunged 62% from the loopy peak on August 31, 2022 (information by way of Investing.com):