Europe’s ‘not out of the woods’ despite gas prices falling to 4-month lows
The latest data shows that the EU’s overall storage levels are at an average of nearly 94% full.
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European gas prices may have dropped to levels not seen in more than four months, but this is far from being the end of the energy crisis, four industry analysts told CNBC.
The Dutch Title Transfer Facility (TTF) is Europe’s main benchmark for natural gas prices. Russia’s invasion of Ukraine and the subsequent pressures on Europe’s energy mix have pushed natural gas prices to trade at historic levels back in August — above 340 euros per megawatt hour. However, these have significantly come down since then, ending Thursday’s session at 108.5 euros per megawatt hour.
In addition, intraday European gas prices even went negative at the start of the week — meaning that holders of natural gas paid buyers to take the cargo off their hands.
“With gas storage near full, LNG inflows in oversupply and favourable mild autumn weather, prices are doing the work to keep the system balanced as commodities trade in the present,” Ehsan Khoman, head of commodities research at MUFG Bank, told CNBC via email.
The latest data compiled by industry group Gas Infrastructure Europe shows that the EU’s overall storage levels are at an average of nearly 94% full. That’s comfortably above the 80% target the bloc had set for countries to reach by the start of November.
Some of the LNG (liquefied natural gas) orders made during the summer are arriving now, when storage is full, representing an oversupply. Temperatures in the region have also been unusually warm, with some nations currently experiencing 20 degree Celsius (68 degrees Fahrenheit) heat.
Nikoline Bromander, analyst at consultancy Rystad Energy, said high output from wind power and political agreement within the EU on cooperative measures to reduce gas prices and consumption have contributed to lowering gas prices.
But Europe’s energy crisis isn’t over, and analysts are warning European policymakers against complacency.
Europe ‘not out of the woods’
“The temptation in Europe will be to take a sigh of relief and acknowledge the hard work and tough decisions on demand and supply that have been taken,” Bromander said in a research note.
“However, a series of factors – from Asian demand for LNG potentially increasing to a lack of sufficient regasification facilities in Europe means that decision makers may feel the pressure sooner rather than later.”
One of the big question marks is what will happen to LNG demand when China fully reopens its economy. Beijing has been the biggest buyer of LNG in the world, but its zero-Covid policy has prevented its economy from operating at full capacity. If this dynamic changes in the coming months, there will be more competition for the commodity and prices could spike.
Even if this winter ends up being mild, next winter also remains a supply concern.
Tom Marzec-Manser
head of gas analytics at ICIS
Henning Gloystein, director for energy at consultancy firm Eurasia Group, told CNBC that “the current glut shouldn’t be seen as a signal though that the upcoming winter might not see energy shortages.”
“Given there’s virtually no Russian gas available in Europe, supply is tight. Once it gets cold, inventories will draw down. If there’s a late winter cold snap when stocks have been reduced, thigs could get pretty tight in early 2023, meaning possible price spikes and potential energy shortages,” Henning said, adding that “it’s therefore still very important for industry and households to try to reduce consumption.”
Tom Marzec-Manser, head of gas analytics at energy consultancy ICIS, reaffirmed the point that that weak gas prices in recent days should not be interpreted as a sign that Europe is now out of the woods when it comes to managing the lost flows from Russia.
Before Russia’s invasion of Ukraine, the EU was obtaining about 40% of all its natural gas from Moscow. That has now fallen below 10%.
“Forward pricing indicates that high prices will soon return: ICIS data shows gas for delivery in January is more than four times the price of spot gas at the TTF,” Marzec-Manser told CNBC via email.
Europe has in recent months endured a sharp drop in gas exports from Russia, traditionally its largest energy supplier.
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“Even if this winter ends up being mild, next winter also remains a supply concern as refilling storages through the summer of 2023 will be much harder than summer just gone, with little-to-no Russian gas available,” he added.
Several experts have warned that Europe’s high storage levels were to a large extent achieved with Russian gas. Even Xavier Bettel, the prime minister of Luxembourg, an EU nation, acknowledged earlier this month that storage was full with Russian gas. However, Russia supplies have been severely disrupted and it is Europe’s aim to be completely free from Russian fossil fuels.
Furthermore, there’s also the risk that European demand picks up in the coming months.
“The risk with the sell-off in the European gas market is the potential that demand starts to pick-up,” Khoman from MUFG Bank said, citing reports that fertilizer producers in Europe are easing curtailments.
“If this is part of a broader trend that we see in European demand, it would make it increasingly difficult for Europe to rebuild storage to comfortable levels ahead of next winter,” he added, projecting gas prices to average 200 euros per megawatt hour in the second quarter of 2023 and until the end of next year.
The CEO of EDP, Portugal’s utilities firm, summed it up when speaking to CNBC’s “Squawk Box Europe” Friday. “Certainly we are in a much better place than we were a couple of months ago,” Miguel Stilwell d’Andrade said, but “we should expect a lot of volatility going forward.”
Environment
Baidu- and Geely-backed JiYue brand unveils ROBO X EV that goes 0-100 km/h in under 1.9 sec
JiYue, a Chinese EV brand focused on delivering all-electric “robocars” to the masses, has unveiled its latest model, and it’s quite a deviation from its previous EVs—but in the best way. Earlier today, JiYue launched the ROBO X supercar, designed for high-speed racing. By high speed, we mean 0-100 km/h acceleration in under 1.9 seconds. My mouth is watering.
JiYue has only existed since 2021, when parent tech company Baidu announced it was expanding from software development into physical EV production, joining forces with multinational automotive manufacturer Geely.
The new “robotic EV” marque initially launched as JIDU with $300 million in startup capital before garnering an additional $400 million in Series A funding, led by Baidu, in January 2022.
In August 2023, Geely took on a larger role in JIDU alongside a greater financial stake as the brand reimagined itself as JiYue, inheriting the JIDU logo and its flagship model, the 01 ROBOCAR.
In December 2023, Baidu and Geely unveiled a second model called the JiYue 07. It was born from JIDU’s ROBO-02 concept, which debuted in 2023 and was designed to compete against the Tesla Model 3 in China.
The 07 finally launched in China earlier this year with 545 miles of range. With an all-electric SUV and sedan on the market, JiYue has unveiled an exciting new entry in the form of a performance supercar called the ROBO X. Check it out:
JiYue’s new ROBO X EV is available for pre-order now
JiYue showcased its new ROBO X hypercar in front of the crowd at the 2024 Guangzhou Auto Show earlier today. Similar to previous models but with a unique spin, JiYue described the ROBO X as an AI smart-driving supercar that, for the first time, blends artificial intelligence and autonomous driving into a high-performance, race-ready EV.
When we say “high performance,” we mean a quad motor liquid-cooled drive system that can propel the ROBO X from 0 to 100 km/h (0 to 62 mph) in under 1.9 seconds. JiYue called the new ROBO X a “performance beast” with “the perfect balance of excellent aerodynamic performance and high downforce.” JiYue CEO Joe Xia was even bolder in his statements about the ROBO X:
For the next 20 years, the design of supercars will bear the shadow of Robo X. This is the best design in the history of Chinese automobiles today, and it is a landmark presence.
Fighter-style airflow ducts bolster the EV’s aerodynamics, efficiency, and overall posture. Per JiYue, the two-seater ROBO X is expected to deliver a maximum range of over 650 km (404 miles).
The new supercar features falcon-wing doors, a carbon fiber integrated frame, and a professional racing HALO safety system offering 360° of support. The interior features an AI smart cockpit with SIMO real-time feedback to give drivers an immersive racing experience.
Furthermore, JiYue said the vehicle will utilize parent company Baidu’s Apollo self-driving technology, which could make it the first electric supercar to apply pure-vision ADAS technology that enables track-level autonomous driving.
Following today’s unveiling of the ROBO X, JiYue has officially opened up pre-orders in China for RMB 49,999 ($6,915). That said, reservation holders will need to be patient as JiYue shared that it doesn’t expect to begin mass production of the ROBO X until 2027.
What do you think? Will people be talking about the ROBO X for the next 20 years?
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This week on Electrek’s Wheel-E podcast, we discuss the most popular news stories from the world of electric bikes and other nontraditional electric vehicles. This time, that includes the launch of the Lectric XPedition 2.0, Yamaha e-bikes pulling out of North America, LiveWire unveils an electric scooter concept, PNY readying its cargo e-scooters for pilot testing, Royal Enfield’s first electric motorcycle, and more.
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Crude oil futures were on pace Friday for loss for the week, as a supply gut and a strong dollar depresses the market.
U.S. crude oil is down more than 2% this week, while Brent has shed nearly 2%.
Here are Friday’s energy prices:
- West Texas Intermediate December contract: $68.56 per barrel, down 14 cents, or 0.2%. Year to date, U.S. crude oil has shed about 4%.
- Brent January contract: $72.36 per barrel, down 20 cents, or 0.28%. Year to date, the global benchmark has lost nearly 6%.
- RBOB Gasoline December contract: $1.99 per gallon, up 0.46%. Year to date, gasoline has fallen more than 1%.
- Natural Gas December contract: $2.70 per thousand cubic feet, down 2.98%. Year to date, gas has gained more than 4%.
The International Energy Agency has forecast a surplus of more than 1 million barrels per day in 2025 on robust production in the U.S. OPEC revised down its demand forecast for the fourth consecutive month as demand in China remains soft.
A strong dollar also hangs over the market, as the greenback has surged in the wake of President-elect Donald Trump’s election victory.
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