Brent Near $97, European Gas at Three-Year High
The Brent barrel climbed to $96.91 on Monday morning, while gas on Amsterdam's TTF market hit its highest level in more than three and a half years, with stockpiles below average.
Brent crude was quoted at $96.91 a barrel on Monday morning, September 7, up 0.16 percent on the day, with some quotes that same morning already crossing $97. That extends the rally we covered on September 5, in the article Brent Up 8% in a Week as European Gas Rises for a Fourth Time, and adds momentum to a fuel that keeps getting pricier ahead of winter.
Meanwhile, gas prices in Europe reached a level the market has not seen in years, though sources disagree on the exact figure. According to Investing.com data cited by Tanjug and Srpskainfo, the October gas futures contract on Amsterdam’s TTF market stood this morning at 74.755 euros per megawatt hour, down a slight 0.23 percent on the day. Trading Economics tells a different story for the same day: a jump of more than 2 percent in European gas, to 73 euros per megawatt hour, which it calls the highest level in more than three and a half years. The gap comes from different measurement times and different quotes on the same contract, but both sources agree on the direction: gas prices are climbing and hovering near a multi-year high.
Why Is the Strait of Hormuz Pushing Gas Prices Higher?
Two factors are compounding the increase. The first is stockpiles: gas storage across the European Union is about 62 percent full, below the five-year average for this time of year, just as Europe starts building reserves for the winter heating season.
The second factor is geopolitical. Roughly a fifth of the world’s liquefied natural gas trade passes through the Strait of Hormuz, most of it from Qatar. Iran has announced a restricted navigation zone beyond the strait, which delays Qatari LNG shipments to Europe just as the continent builds up its winter reserves. The combination of lower stockpiles and slower imports is what is pushing gas prices up, while the same rising demand is also driving oil prices higher.
To see how much the market has shifted in a month and a half: on July 31, Brent stood at $86.026 a barrel, and the September TTF futures contract that was current at the time was at 57.070 euros per megawatt hour. Since then, oil has gained more than ten dollars a barrel, and gas has climbed by nearly a third of its price.
Stock Markets: Tanjug and Srpskainfo Disagree
Reports on European stock indexes for the same morning also diverge. Tanjug’s headline says European indexes were mostly higher. Srpskainfo, citing the same Investing.com data for the same day, gives the opposite reading: Germany’s DAX at 25,987.14 points, down 0.24 percent; Britain’s FTSE 100 at 10,805.67 points, down 0.23 percent; and France’s CAC 40 at 8,264.87 points, down 0.17 percent. Since both outlets cite the same service for the same moment yet disagree on the direction of the indexes, readers should note that the discrepancy exists, not which side is correct.
In other markets, the euro was worth $1.1619 this morning, up 0.04 percent. Gold fell to $4,443.51 an ounce, down 0.74 percent, a decline that comes even as oil is rising, meaning investors are not treating the two markets as moving together this morning. Wheat was down 0.20 percent, at $7.3125 a bushel.
What This Means for Heating Costs
If the Strait of Hormuz is in fact partly closed to shipments, and EU gas stockpiles stay below the five-year average, the next move falls to European importers: they either pay more for alternative LNG cargoes, or head into winter with thinner reserves than in the past five years. Neither scenario is confirmed yet, but the numbers pointing toward them are already on the board.
