Having passed the first test at the end of November, the European energy ecosystem will face its second major cold test in the coming days. After a mild heating season to date, which has allowed the Twenty-seven to preserve their natural gas reserves almost intact, the plummet in temperatures in the final stretch of the week — with forecasts of up to -21 degrees Celsius in Oslo , -18º in Helsinki, -12º in Stockholm, -10º in Warsaw, -5º in Madrid and -4º in Berlin— will test its resistance after the price and supply crisis experienced in 2022 and in the first half of 2023.
The cold, although somewhat attenuated, will continue in the first stages of next week, according to the weather reports. The intensity and, above all, the duration of the episode are key to gauging its impact. At the moment, this is being minimal in the markets: far from rising, the price of natural gas—the best thermometer of nervousness— It remains in Europe at around 32 euros per megawatt hour (MWh)even falling slightly this Tuesday.
The price of gas is also not being affected by the new security problems in the Red Sea, which have led one of the largest shipping companies in the world, Maersk, to once again paralyze the navigation of its ships through the area. This resurgence, however, is having a dent in the oil market: this Tuesday, the barrel of Brent crude oil (the benchmark in Europe) rose by more than 2% to slow down the pace in the last part of the day. .
The growing installed capacity of renewable energies is being key to avoiding greater evils in the Old Continent. This new flow of green generation is displacing gas and coal from the electricity matrix, reducing the consumption of both fuels and, therefore, taking pressure off prices. The sharp drop in industrial demand for gas as a result of the energy crisis has also contributed to this lesser anxiety, when the explosion in prices made it unfeasible for many companies to maintain the pace of activity and forced them to boost the import of intermediate products.
“We have very full storage and a lot of industry is still stopped, so consumption is not out of control either,” he notes. Javier Revuelta, from the Swedish energy consultancy Afry. “And the French nuclear company has given good news, with a large part of its fleet back.” This last factor is also important: as is the case with the increase in renewable production, the improvement in the generation figures of Europe's largest atomic power substantially reduces the need to burn gas to obtain electricity. One less source of demand.
Gas reserves in the EU have closed 2023 at just over 86% of their capacity, according to the latest data from Gas Infrastructure Europe. Although the figure has fallen compared to the 99.6% it reached at the beginning of November, deposits continue at more than healthy levels, close to its historical maximum for these dates. One more factor that puts downward pressure on prices and alleviates fears about the future supply of liquefied natural gas (LNG, which is moved by ship). This new litmus test will serve to measure Europe's capacity for resistance, but the apocalypse so often announced is further away today than at any other time in the last two years.
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