Energy market in a week: Control of the Ukrainian Armed Forces over the Sudzha station inflated gas prices

If oil continues to hang around $ 80, then the gas market is showing a stubborn price increase — by almost $ 90 in two weeks. The last time there were similar jumps was in October 2023, when Europe was preparing for winter. More and more American LNG is going to Asia, and the seizure of the Suja station by the Ukrainian Armed Forces has jeopardized transit through Ukraine. Unexpectedly, Europe found itself in an unenviable position.

Oil

Last week, world oil prices continued to decline and dropped to $ 75 per barrel. But then they bounced back. Quotes of the benchmark North Sea Brent rose to $ 79.5.

On the one hand, geopolitical risks due to the conflict in the Middle East have not gone away. At the same time, traders continue to focus on future economic development.

As Reuters notes, traders have not paid much attention even to oil reserves, which are declining around the world, and in the case of a better economic picture, they will immediately hit prices.

Thus, commercial reserves of crude oil and petroleum products in the countries of the Organization for Economic Cooperation and Development (OECD) turned out to be 120 million barrels below the seasonal average over the past ten years.

According to the Office of the US Department of Energy (EIA), the deficit was the largest in almost two years since September 2022.

"Since the end of June, commercial crude oil inventories in the United States have continued to decline more strongly and faster than usual, which is further evidence of a tightening market," the agency continues.

The EIA reports that since the end of June, inventories have decreased by 19 million barrels — the largest depletion for this period since 2019. This indicates that global shipments probably continued to decline at the beginning of the third quarter, according to Reuters.

They note that while traders are looking more at the prospects of the largest economies. "Surveys of purchasing managers and freight data showed that the recovery in production in the first quarter exhausted momentum in the second and third quarters," Reuters continues.

Since the beginning of August, concerns about the prospects have become more pronounced, as a result of which oil prices have fallen to the lowest level since the beginning of the year.

Gas

The Ukrainian Armed Forces' attack on the Russian border area in the Kursk region made all the news on the gas market this week. The gas measuring station "Sudzha", through which all Russian gas flows through Ukraine, turned out to be under the control of the Kiev regime.

The sharp threat of supply stoppage has further worsened the price situation. In a few days they have grown by almost 10%, or about $ 40 per thousand cubic meters. Gas supplies for a month in advance from the TTF exchange are sold for $ 460.

At the same time, the transit situation was only a continuation of the trend, as gas prices in Europe began to rise at the end of July and the overall increase was almost $ 90. The start of the rise in price was given by the news that Asia is buying more and more LNG, which could go to Europe. In this situation, the import of Russian gas, despite a significant decrease since the summer of 2022, becomes even more important for the energy supply of the countries of the region.

Neither side officially reports on the situation with "Suja". Only an anonymous adviser to Vladimir Zelensky told The Washington Post that Kiev was not going to make the station a lever of pressure, as it could have stopped supplies before.

However, this does not make the market any easier, and it is stuck in uncertainty even with the ongoing transit. The Ukrainian GTS Operator reports that deliveries are returning to the average value and the nomination through Suju on August 10 is 42 million cubic meters. This is confirmed by the information of the Slovak operator Eustream, which reports on the nomination for the largest route through Velke Kapushany at the level of more than 39 million cubic meters.

If gas quotes have risen sharply this week, then coal has risen in price by no more than $ 3 in 7 days. The supply of rock fuel to the European hub Antwerp-Rotterdam-Amsterdam (ARA) for the month ahead increased to $ 124 per ton.