Katrina Filipenko, Principal Analyst, Wood Mackenzie
14:00 | September 2, 2022
Will Nord Stream run again on Saturday?
Good question. We think it will go again, but that doesn’t mean it will last.
We accept that there will be further disruptions – either on Nord Stream or other pipelines. But Russia will try to keep putting pressure on Europe by disrupting gas supplies. It will also try to support prices by keeping the market in uncertainty.
What do you think about the price?
Prices are extremely volatile. The curve is set to rise sharply in the winter and next summer.
However, we expect prices to stabilize somewhat in the summer of next year, because they are currently largely determined by the situation in the energy markets. And they are expected to be more stable next summer.
I get confused looking at European gas prices. No movement in the last few days despite all the news and what you say. Well, they might go up, but there’s no guarantee of that. Are we used to the situation? Is this what the forward price curve is showing us? Or is there a reconciliation?
Partly yes. The market seems to have got used to it. But prices are also slightly firmer than they were earlier because Europe filled its storage to its target earlier than expected.
The market is calming down a bit, at least for the coming winter.
How much destroyed demand do we have in Europe as a result of these extremely high prices?
There has been a fairly significant destruction of demand in the industry and we assume that will continue. In winter, we expect demand to be about 7% weaker than the average levels for 5 years. in Europe.
This is significantly less than the EC’s target of reducing demand by 15%. So there is potential for further contraction in demand.
Is this drop in demand due to ordering or is it because prices are too high and are leading to a legitimate destruction of demand?
A combination of both. Part of the demand is down because prices are too high, but another part is because of the anticipation of what will happen in the winter, it’s politically induced.