By Paul Homewood
5 charts explain gas & power price slump into 2023
Europe entered winter confronting the threat of gas & power supply cuts and price spikes. Policy makers scrambled to protect consumers. Energy companies did their best to protect portfolios.
Across the 4 weeks from mid Dec 2022 to mid Jan 2023 Europe’s energy crisis delivered its latest twist. Instead of spiking, gas & power prices slumped. Benchmark TTF forward gas prices for delivery across 2023-24 were cut in half, falling 40-60%.
The knock-on impact of this rapid decline was a textbook case study in why the European gas market is so important to broader energy market pricing. European power prices saw an associated decline as the variable cost of marginal gas generators fell. Pacific & Atlantic basin LNG prices also followed TTF south given Europe’s key role in anchoring global LNG prices.
What the …. happened? Let’s…
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