BAKU, Azerbaijan, Oct.12
By Leman Zeynalova – Trend:
Low storage levels are expected to further increase Europe’s reliance on gas imports through the heating season, Trend reports with reference to the International Energy Agency (IEA).
“In Brazil, the prolonged drought left the country’s huge water reservoir levels 25 percent below their five-year average by the beginning of October, which could lead to further demand for LNG imports in the coming months. Prospects for the coal market, with low inventories ahead of the winter season not only in China but in all key consuming regions, are little better. Current market dynamics (forward curves as of beginning of October) suggest that European benchmarks for natural gas (TTF) and coal (Rotterdam coal) will remain high, averaging USD 30/MBtu and USD 190/t through the 2021-22 heating season respectively,” reads the latest IEA report.
Globally, the key drivers of energy market dynamics over the coming months will be the severity of the Northern Hemisphere winter, the strength of economic growth trends and the magnitude of unplanned supply outages, the agency believes.
“Prices of both natural gas and electricity will fluctuate in Europe depending on temperatures, wind output and many other factors. In this sense, weather conditions will affect markets from both the demand and supply sides. These fluctuations may be exacerbated by reduced natural gas storage levels, since these result in lower pressure levels that weigh on the ability to withdraw gas from storage sites during periods of high demand,” the report says.
IEA believes it is legitimate for countries to take emergency measures such as temporary relief from some taxes or charges to ease the burden on consumers, especially the most vulnerable, from periods of short-term market turmoil. “But these measures should be implemented in such a way that they do not worsen the investment environment for low-carbon energy sources and technologies – such as renewables, energy efficiency, electricity grids, nuclear power and sustainable biofuels – which are vital for the transition to cleaner and more resilient energy systems.”
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