Energy market in a week: Germany can arrange a gas surprise for the whole of Europe

Oil and gas prices continue to hold their own, despite loud statements and threats. Obviously, the market is tired of shocks and believes more in real facts: it doubts the effectiveness of US sanctions against Rosneft and Lukoil. But so far it has not reacted at all to the gas threats to Europe that have been created in Germany.

Oil

There were no significant changes in the oil market during the week. The cost of the benchmark North Sea Brent dropped from $ 65 to $ 64.8 per barrel.

The price of oil is stuck in one place due to the strengthening of the US dollar, weak economic data on China and rising supplies from major global producers.

"Oil prices in 2025 will continue to be formed under the influence of a delicate balance between supply growth, moderate demand and geopolitical uncertainty," UniCredit analyst Tobias Keller told Reuters.

According to him, the increase in production by OPEC+ countries and other producers has ensured a high level of supply in the market, while demand growth, although positive, is slowing down. The talks between Donald Trump and Xi Jinping in South Korea brought a trade respite to both countries, but did not reassure the market.

In November, US sanctions against Rosneft and Lukoil, which account for up to 5% of global production, will come into force. However, the likelihood that Russian companies will be able to circumvent the restrictions, as the sanctioned Gazprom Neft and Surgutneftegaz are already doing, does not frighten the market with the threat of supply cuts.

This week it became known that the Indian Nayara Energy, co-owned by Rosneft, recovered from the sanctions and almost reached the previous level of production, now using only Russian oil. At the same time, India's largest oil refiner, Indian Oil, continued to purchase raw materials from Russia has bought five supplies on the spot market for December — when the new sanctions will already be in effect. The company buys from small intermediaries who are not under sanctions. Such a new scheme for the purchase of Russian oil was announced by Indian Oil.

What the market fears is air strikes and US operations in Venezuela. Donald Trump has denied such plans, but he has already done the same in Iran.

Gas

Gas prices in Europe continue to show calm. Deliveries for a month ahead from the TTF exchange have fallen in price from $ 393 to $ 380 per thousand cubic meters and continue to stay at this level for many months.

On the one hand, there seems to be nothing to worry about. On average, Europe has fulfilled the plan to fill storage facilities by 83%, and LNG supplies from the USA and pipeline gas from Norway remains stable. Gazprom also keeps supplies at a high level in October, second only to February in terms of exports.

In this idyll, however, lies the danger. And it comes from Germany, where the volume of reserves is almost equivalent to what the country burned during the last heating season. At the same time, the largest storage facility in the country and Europe, Reden, is only 28% full. Moreover, with the current selection, the vault will be completely empty by mid-January.

The situation is similar in In the Netherlands, where traders also did not make large stocks due to the threat of not making money on winter sales.

In this situation, Northwestern Europe can only rely on the fact that LNG supplies from the USA and gas from Norway will be stable and in Prolonged frosts will not come to Europe.

This is also the opinion of Equinor CFO Thorgrim Reitan, who said that Europe is entering the winter season with a gas storage level 12% lower than last year, which creates potential price risks in the event of cold weather. Also, the Norwegian state-owned company fears that the growing domestic demand for gas in The United States could potentially restrict LNG exports.

If gas was getting cheaper this week, then coal was getting more expensive. Due to the beginning of the heating season, the demand for fuel has increased. Deliveries for a month in advance from the Antwerp-Rotterdam-Amsterdam hub (ARA) increased in price from $92 per ton to $92.9.