Author of this article: Cuckoo
This article only represents the author's views and does not represent the position of this account
The United States and Europe Natural gas has fallen out of negative prices. This matter is shocking. What's going on in Europe's energy problems? Has the crisis been lifted? Isn’t Europe a natural gas shortage? Why is there a market where no one takes over? Faced with risks, Europeans have actually begun to take action, but the European energy crisis cannot be clearly stated in one or two sentences.
According to multiple US media reports on October 25, the spot price of natural gas in the center of Waha in the Permian Basin of West Texas, the United States fell rapidly on the same day, falling to a low of minus US$2/million British Trending, while it was around US$5 a week ago. This is the first time that the natural gas price in West Texas has fallen below zero since 2020. At the same time, the natural gas price in Europe also began to fall, and the spot trading price of the European natural gas trading center, the Netherlands (TTF), fell to a negative value, reaching below 15 euros /megawatt-hour. What exactly happened to the international energy market? Is the European energy crisis dramatically lifted?
's answer is not that simple. The grasp of the international situation sometimes requires understanding from the perspective of the market and industry, especially the European energy crisis involves the differences between natural gas spot futures , and even futures have to be delivered in many different times. Today we will explain and analyze it in the simplest language, and then compare and analyze it. Everyone can be clear. Since Russian natural gas faces sanctions, we can simply start from the European and American natural gas exchanges. The European Natural Gas Trading Center is mainly located in the Netherlands, and the special feature of the Dutch natural gas trading and other transactions is that it belongs to a "virtual point" transaction, that is, it does not involve spot delivery, but only involves settlement. In other words, if the US natural gas ship is pulled to Europe, it may be directly pulled to Germany and other recipient countries, but it may be settled on the exchange according to the price on the Dutch exchange, that is, the "property transfer" of the goods.
. Regarding the ultra-low negative price of natural gas in Europe and the United States, that is the spot price. For example, TTF Next Hour Gas Spot Price, although it is the next hour's goods, it is still an extension of spot stock; the same is true for natural gas spot stocks in Texas, the United States. Futures generally take delivery of goods from 1 month, 3 months, half a year, one year, etc. Negative prices are all spots of European natural gas, while companies often rely on long-term and stable agreement procurement in their industries. Spots often reflect the current transactions of "excess goods in hand" and "buyers' temporary urgent needs".
, and most of the transaction volume involves long-term ordering goods from various periods. Combining these, there is a TTF natural gas benchmark price, which reflects the more real price in the European market, rather than the temporary price. Although the benchmark price of Dutch natural gas TTF has fallen by more than 70% from the previous price of 300 euros megawatt hours, it has just recently fallen below 100 euros megawatt hours. For example, on October 26, the benchmark Dutch TTF natural gas futures price once rose by more than 4% to 103.81 euros/megawatt hours, but then fell back to 99.75 euros/megawatt hours. Maybe everyone has no idea about this price. It seems that it has dropped a lot. Is it really cheap? It doesn’t. In contrast, U.S. natural gas prices have recently hovered around $6 per million British thermal. After heating value conversion, 1 MWh = 3.41 million British thermal energy. The real price of natural gas in Europe and the United States still has a price difference of about 5 times.
After understanding these, let’s look at what the message says. The explanation given by the United States is that the local pipeline system maintenance plan will make local natural gas production exceed the pipeline's outbound capacity. The explanation from Europe that some spot prices fell to negative is because the current European natural gas inventory is too high and the excessive natural gas transported in has nowhere to be placed.
first looks at the United States. According to Americans, the direct reason for the negative gas price drop is the maintenance of two gas pipeline systems under the US energy infrastructure giant Kinder Morgan, which has led to local producers having to reduce production or suspend gas transmission.Natural gas prices in the Permian Basin, Texas, will continue to be under downward pressure this week until pipeline overhaul is completed. However, the reality is that the pipeline capacity in the United States is insufficient, especially the limit on natural gas production by the Permian pipeline capacity has never been alleviated, which makes the region more susceptible to sudden oversupply and price fluctuations. In other words, there are many productions, but the output of pipeline problems is slow. In fact, blockage points in the U.S. natural gas pipeline have existed for a long time.
, and this involves the industrial layout and political game of natural gas in the United States. Let’s briefly talk about a large number of natural gas industries located near Texas, that is, Republican states, whether it is the Permian Basin or Gulf of Mexico . Natural gas power generation in Texas has accounted for more than 60%. The Texas power crisis was also impressive. The Texas power grid is one of the independent power grids. The power grid collapsed due to the power allocation problems and sudden climate caused by new energy power generation . At that time, the Eastern Power Grid, which actually had cable transmission with the Texas power grid, did not provide the largest stable power supply and assistance, and the scale of the Eastern Power Grid is far larger than the Texas power grid.
It can be seen that Hongzhou, especially Texas , tends to be natural gas and new energy, and the eastern power grid mainly controlled by the Democratic Party is relatively large in scale and relatively stable. Due to the rapid advancement of new energy, Blue State is unwilling to assist in power stability. The natural gas pipeline, especially those extending from Texas to the inland United States, is obviously also subject to corresponding clamping, which can also be confirmed by the huge gap in the proportion of natural gas use between Texas and other states. As a major natural gas exporter, the United States itself cannot control its own production and sales? Do it necessarily cause huge energy fluctuations in the local area? And the price of natural gas in the United States is actually not high. Of course, the huge fluctuations are natural gas spots, and the reaction is the struggle behind the industrial forces related to political forces in the United States. After all, the midterm elections are coming soon. Based on a simple understanding of these other situations, the statements such as American pipe maintenance are credible.
, and the European side is much easier to explain. Recently, we have said that Europe's natural gas inventory will be full. According to the latest data from the European Natural Gas Infrastructure (GIE), the natural gas storage volume in Europe, especially Germany, is close to 95% of the storage capacity, and there is no unnecessary space to cope with the continuous import of liquefied natural gas . Correspondingly, it began to be reported last week that China's natural gas ships will no longer be transferred to Europe. Why is it called luck? More people know about this. Previously, China signed long-term natural gas orders with natural gas giants such as Cheniell in the United States, but the price was not high. The European energy crisis has occurred, and the natural gas price in the European energy market is many times higher than that in all parts of the world. Therefore, China's LNG ship was directly driven from the United States to Europe and sold. This also changes as European gas storage is about to fill up. After all, no matter how much Europeans want to buy it, no matter how much the United States and China want to sell it, they can't hold it there, and even the ports can't stop. We have also mentioned earlier that Europe's natural gas storage volume will reach one-fifth of the annual consumption, and Europe essentially needs more natural gas.
According to BBC, there are 51 LNG transport ships waiting to unload the cargo near the European coastline, and 35 LNG transport ships wandering in the Spanish waters alone. Europe has done its best to deal with the natural gas on these ships. Media statistics show that Europe is expected to receive unloading of 82 LNG carriers this month, an increase of 19% from September. But at present, about 60 LNG transport ships are sailing towards northwestern Europe, Mediterranean and Iberian Peninsula . Therefore, the contradiction between more LNG ships in European ports and a large number of ships leaving is that Europe's more realistic long-term natural gas prices are still far higher than those in other parts of the world, but inventory is about to fill up and fill up the excess goods, resulting in a huge difference reflected here.
price reflects market problems very fully reflected in the European energy crisis.Short-term prices reflect the shortcomings in European natural gas inventory, and the long-term comprehensive prices in the future reflect that Europe's potential actual demand for natural gas still needs to be compensated. The natural gas spread in Europe is still nearly five times that shows that the European energy crisis is far from over, but it is indeed facing a new stage. Obviously, the huge profit of is temporarily in . There will be no problem with energy supply in essence. LNG ships will still wait in European ports, as long as Europe has money. At the same time, we see Schultz html's 5200 billion euro energy security plan, probably to give long-term confidence to the global natural gas suppliers to Europe.
Not only that, Europe has finally started to take action in all aspects. According to Reuters on September 29, senior officials of EU said that European Commission will launch a natural gas price benchmark that can replace the Dutch TTF. Obviously, Europe is also striving for independence in pricing power. After all, the decision-making power of the Dutch TTF price is under the seller market is obviously in the United States. The European energy crisis is still severe. Obviously, Europe is starting to control risks and is believed to be effective. However, the expansion of inventory and the construction of new energy are still arduous tasks facing Europe. In addition, not only should we reduce expenditure but also open up resources. We should not only control the risks of energy supply, but also focus on industrial products and international trade , etc. This can also be recalled the upcoming Scholz visit to China in the near future. At the same time, the more important thing is that even if the immediate risks can be overcome, how much will the long-term interests be given up? After stabilizing the current energy crisis to a certain extent, the future of Europe's energy security and its efforts to move towards stable development will be issues that Europe will think deeply about in the future.
