After a wave of declines in energy prices and major energy commodities, this week there was a fairly significant change in the situation.
On 10/09/2019 electricity prices in Western Europe as well as natural gas and CO2 allowances recorded a strong increase 📈:
In one day, the price of electricity in Germany increased by more than 4%. The price of natural gas in Poland was over 6% higher compared to the previous day, and over 8% on a weekly basis. The price of CO2 certificates also increased by over 6%. Electricity in Poland recorded a slight increase on this day (only 0.36%), but on the next day prices for the contract for 2020 increased by more than 1% in one day.
🤔What happened that the markets reacted so rapidly?
The reasons for the increase in gas prices
👆 The Netherlands decided to close production earlier in GRONINGEN, which is the largest gas field in Europe by the end of 2022. The deadline has been shortened by 8 years. This is due to the threat of earthquakes in this region.
👆 In addition, on 10th September the Court of Justice of the European Union (CJEU) announced a precedent judgment on the use of the OPAL gas pipeline, which is the land part of the NORD STREAM gas pipeline. The judgment of the CJEU annuls the decision of the European Commission regarding the increased use of the OPAL gas pipeline by NORD STREAM. As a consequence, NORD STREM will lose the ability to send Germany 12.7 billion m3 of natural gas annually.
The reasons for the increase in electricity prices
👆 French EDF announced anomalies in the operation of several nuclear reactors.
👆 Dutch decision to stop gas production in Groningen; while France has problems with nuclear reactors, gas power plants in France's neighboring countries are producing electricity at full capacity to sell it dearly to France, which is in short supply.
👆 Increase in prices of CO2 emission rights due to potential higher demand for coal as a result of technical problems in nuclear power plants in France.
As you can see, energy markets react very quickly to changes in the relationship between the supply and demand side.
The next day the situation calmed down slightly: