Soaring prices continue to exert pressure on Europe’s energy sector

November contracts at the Dutch TTF hub — a European benchmark for natural gas — were trading at around 118 euros per megawatt hour (MWH) just after midday in London. The front-month contract was up almost 19% on the day, setting a new record high, and has risen almost 400% since the start of the year.

In the U.K. — which has been hit particularly hard by the surging cost of wholesale natural gas — prices for November rose 14% to £2.79 per therm on Tuesday. Meanwhile, British wholesale gas for immediate delivery rose by 23% to £2.50 per therm.

Soaring wholesale prices have partially been caused by a surge in demand, particularly from Asia, as economies emerge from Covid-19 induced lockdowns. A cold European winter and spring also meant supplies had already been heavily depleted by the summer.

Meanwhile, falling domestic production, adverse U.S. weather conditions and essential maintenance works have created a tight gas market and made restocking gas supplies ahead of the coming winter difficult across the region.

Several British energy suppliers have collapsed amid the gas price crisis. September alone saw nine companies cease trading, according to reports.

In a normal year, between five and eight companies exit the U.K. market, according to U.K. Business Minister Kwasi Kwarteng.

SOURCE: CNBC