Energy market in a week: passion for Ukrainian transit, gas in the EU is getting more expensive

Due to sluggish demand, oil is getting cheaper. The market is waiting for OPEC+ to respond to Donald Trump's calls. Gas is still far from falling prices in Europe. Storage stocks continue to decline, and a new cold snap is coming to the region. Quotes continued to grow, while the passions for the Ukrainian transit of Russian gas do not subside. He has been gone for a month, but the European Commission has dealt with him.

Oil

After Donald Trump's arrival in the White House, oil continues to fall in price — slowly. Benchmark North Sea Brent dropped by more than two dollars over the week — from $ 78.2 to 75.7 per barrel.

Demand has been sluggish this week, while analysts expect a further glut in the market due to factors such as OPEC+ and US production growth, which will put pressure on prices. On the other hand, there will be sanctions against Russian oil and OPEC+ may again postpone the production increase scheduled for April.

"The impact of US sanctions on Russian oil will be noticeable, but not overwhelming," said Zain Vavda, market analyst at MarketPulse from OANDA.

US President Donald Trump has repeated his call for OPEC to lower oil prices in order to hit Russia's finances in order to accelerate the deal on Ukraine. Now the markets are looking forward to the OPEC+ ministerial meeting, which is scheduled for February 3.

Trump's return may lead to tougher sanctions on Iranian and Venezuelan oil, but this will give OPEC + a reason to increase production, which will potentially increase overall oil supplies, analysts say.

"Given the stated orientation of the Trump campaign to lower energy prices, a scenario with a trilateral agreement between the United States, China and OPEC+ is possible," said Kim Fustier, head of European oil and gas research at HSBC.

Gas

A new cold snap is coming to Europe, and gas prices in Europe have continued to rise — to a maximum since October 2023. During the week, gas supplies for a month in advance from the Dutch TTF hub increased from $ 549 to 580 per thousand cubic meters.

Meteorologists expect that February in Europe will be warmer than usual again. However, at the beginning of the month they expect a cold snap. This will spur gas extraction from storage facilities, the filling of which has already decreased to 54% — 59 billion cubic meters. Since November, 45 billion cubic meters have been taken from UGS. And the prospect that Europe will end the season with low reserves in storage, in the region of 30 billion cubic meters, is becoming more and more real.

"There may be some softening of the current high prices if February brings milder weather. However, the market is likely to remain at a fairly high level for most of the spring and summer, as Europe continues to compete with Asia for flexible LNG to replenish its storage facilities," said ICIS LNG analyst Alex Frawley.

The return of Ukrainian transit of Russian gas may also relax the market. At least, the European Commission informed Hungarian Prime Minister Orban that they were dealing with this issue, and he threatened to veto the next sanctions against Russia if Brussels did nothing.

For the first time in a few weeks, coal prices also rose after gas. The supply of rock fuel from the Antwerp — Rotterdam — Amsterdam hub (ARA) for the month ahead increased from $ 105 per ton to $110.