European wholesale gas on summer rollercoaster as prices rise again

'The European market is over-supplied until possible cold weather arrives,' said an energy expert

The spot price of European gas had traded as low as €27 in late July, before surging to €43 briefly last week.  

European wholesale gas prices have continued to trade in a rollercoaster fashion on futures markets, marking a renewed period of volatility that the European Union Commission had worried over since the spike in energy prices in the months following the invasion of Ukraine last year.

On Friday, wholesale gas prices for delivery in September on futures markets climbed 8.5%, while the contract for December rose by over 3%. 

That followed a pattern in recent weeks of large declines followed by large price gains, as traders assessed the risks of threatened strikes at an exports facility in Australia for liquified natural gas, or LNG, supplies. 

Earlier in the summer, prices had tumbled as the EU countries got through the winter without shortages in the key fuel that is used to generate significant amounts of electricity across the continent. Recent price hikes have come despite European storage facilities having already filled rapidly ahead of next winter. 

Last year, the EU Commission had become alarmed when the price of gas spiked to over €300 per megawatt hour, in late summer, threatening to send energy bills for households and businesses to unaffordable levels. The spot price of European gas had traded as low as €27 in late July, before surging to €43 briefly last week.  

“The European market is over-supplied until possible cold weather arrives,” said Jonathan Stern, distinguished research fellow at the Oxford Institute for Energy Studies. “But this kind of ‘rumour volatility’ seems likely to be with us for at least another year.” 

Additional reporting Bloomberg