Oil prices (photo by Paul Lowry / flickr, pixabay)
Norbert Roker, head of research and economics at the Julius Baer investment bank, says that investors are overly concerned about the state of the energy market in Europe, certainly in the short term.
“The European energy market has been very nervous recently. Natural gas prices continue to be volatile as they reach the upper end of the range ranging from below €100 to above €125 MWh. This is likely a result of the colder weather, As well as production outages and temporary pipelines in the North Sea” says Roker.
More in-
“To assess the supply situation of natural gas, we look to the east. With the Russian flows blocked all but the route that passes through the Black Sea, Europe relies on imports from overseas countries to ensure adequate supplies. The global liquefied natural gas (LNG) market has a lot of cargo availability And it is mainly a question of pricing in Europe in relation to other buyers whether these shipments reach its shores.
“Thanks to the mild start to winter, a faltering Chinese economy and increased coal and natural gas output, energy availability has improved significantly on the Asian continent.
“Anecdotal evidence points to abundant coal and natural gas storage. This has been reflected in the recent wave of coal prices, which means Asia’s willingness to pay for liquefied natural gas has declined. Prices around €100 seem to be enough to attract most of the natural gas available overseas to the shores of Europe.
“In our view, in order to challenge Europe’s security of supply, an unlikely scenario combining simultaneously a cold winter, infrastructure problems, prolonged nuclear outages in France as well as a strong increase in global energy demand will be needed. Furthermore, we stick to our bearish views, and expect lower prices In the longer term. This, even though the nervousness in the energy markets in Europe is expected to continue, which suggests additional temporary price increases caused by various bullish headlines.”
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