While the recent spike in gas prices in Europe was driven by market momentum rather than fundamental shortfall in supply, it is likely to remain in place for several months, Werner Antweiler, a professor with the Sauder School of Business at the University of British Columbia, told Sputnik.
The European gas market is seeing its prices skyrocketing and a rise in demand due to several factors, including insufficient power from renewable sources this summer in Europe, and hot summer in Asia, the expert explained.
Other reasons behind the crisis are gas supply cuts, caused by plant problems in Norway and elsewhere, and a “thin safety buffer,” as storage levels are currently below normal, he added.
“The good news is that this is a short-term spike because of temporary conditions that will ease eventually. The spike has been accelerated by fear and market momentum. There is no fundamental supply shortage. Nevertheless, Europeans can expect high gas prices to endure throughout the next months,” Antweiler said.
Among other factors at play, the expert mentioned Russian energy giant Gazprom — one of Europe’s key suppliers — which “has not been able to fill the emerging gaps beyond fulfilling its contractual obligations.”
The crisis was exacerbated by an ongoing global fight to ensure a sufficient supply of natural gas for the upcoming winter, and a rise in liquefied natural gas prices, according to Antweiler.
Earlier in the day, Europe’s gas future prices decreased by nearly 25% compared to Wednesday, falling below $1,000 per 1,000 cubic meters for the first time this month.