Why EU Gas Prices Started to Backpedal

Source: Vostock Capital

According to experts contacted by Izvestia, gas prices in Europe may begin to rise again due to a lack of raw materials and verbal interventions by European authorities. Gas prices fell below $1,000 per 1,000 cubic meters on October 7, halving in less than a day.

The EU media attributed the decrease in energy prices to President Putin’s remarks regarding the potential of increasing market supplies.

Fuel price increases have been seen since the beginning of the summer, when suppliers moved to Asia owing to increased demand for resources.

When it became apparent that Europe’s underground gas storage facilities would not be ready for the heating season in August, fuel prices started to shatter records nearly every day. However, the current price drop may be linked to Russian President Vladimir Putin’s recent remarks regarding the country’s willingness to stabilize energy costs.

However, Vyacheslav Mishchenko, Director of the Center for Analysis of Strategy and Technologies for the Development of the Fuel and Energy Complex at the Gubkin Russian State University of Oil and Gas, thinks that what is occurring in Europe is a “man-made catastrophe.”

“The foundations that had been built over many decades were methodically demolished.” “This is a system of long-term contracts based on oil index formulae for mainly Russian gas supply,” he told Izvestia.

Andrey Polishchuk, a Raiffeisenbank analyst, describes the current situation in Europe as a “traders’ panic.” The situation has changed very little in terms of supply and demand, and what we are witnessing is a price increase not on the actual shipping market, but on the futures market,” he emphasized.