Persistent price swings reduce appetites for fuel use even after the worst of the energy crisis has passed in Europe
Publisehd: Feb 02, 2024 • 2 minute read
(Bloomberg) – Persistent price swings in Europe’s natural gas market are limiting appetite among industrial companies to ramp up fuel usage, even after the worst of the region’s energy crisis has passed. Implied volatility in benchmark Dutch gas has subsided since the start of the year, still remaining well above pre-crisis levels as price swings have become more common. A substantial increase in industrial consumption appears to remain some way off with summer contracts trading higher than those for this winter.
Volatility has become a dominant feature of Europe’s market as it transforms into an international hub for gas trading. That means the region is more exposed to global supply risks — from violence in the Middle East to liquefied natural gas production outages — even though it’s considered to be on relatively stable footing for the rest of this winter. Industry has recently seen some signs of returning activity, but gas consumption is still historically low.