European gas prices exceed $2,500/'000 m3 for first time
Natural gas futures contracts at the Dutch TTF hub soared above $2,500/'000 m3 for the first time in history in early trading on August 16, as the summer heat wave continues and Russian gas supply remains suppressed.
Soaring temperatures have led not only to increased cooling demand but also lower water levels at Europe's hydroelectric dams, right at a time when the continent is scrambling to replace gas with other fuels to reduce prices and save supplies for winter. Russian gas supply to Europe slumped to a record low of 3.6bn m3 in July, down 23% from the previous record low set in the previous month, as Moscow continues ramping up economic pressure on Western leaders to make concessions in the Ukraine war.
Norway has also cut gas flow to Europe as a result of scheduled repairs at fields, and Oslo has warned that it may have to curtail electricity exports to the rest of the continent because of low water levels at its hydro dams, which cover most of the country's power needs. Hardest hit by a cut in Norwegian power exports would be the UK, Germany and the Netherlands.
Wind farms are meanwhile operating at below their capacity. Typically they account for 11-20% of Europe's power mix in summer, but according to the WindEurope association, they were supplying only 9.5% on August 15.
The September contract at the Dutch TTF hub peaked at €234.5/MWh, or $2,535/'000 m3, at approximately 06:20 GMT on August 16. Power prices across Europe are also spiking, with the day-ahead contract in Germany climbing 3.7% on August 15 to €447.5 ($454)/MWh, according to European Energy Exchange data.