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Europe now has so much natural gas that prices just dipped below zero

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Re: Europe now has so much natural gas that prices just dipped below zero

#41

Post by Twisell »

csours wrote: post #34
cj wrote: post #20

Earlier quoted context omitted.

> The above model is oversimplified and wrong. Can you share anything that would help us commoners reading internet comments understand why the analysis is wrong?

There are more than 2 markets. The dominating factors change based on market conditions.

However it would be equally false to believe that the only useful data point come from future market.

Every market that enable trade gambling is bound to be volatile and sometimes disconnected from reality. Gamblers that manage to to accurately estimate this delta are the winning one.

PS: Actually that's how you end up with negative price, a gambler acquired a huge quantity of gaz in the future market hoping to sell it even higher on the daily market. Nice weather daily market drop. He end up selling negative because he's just a gambler living in NYC and he don't have any usage for the gaz he own in a ship ready to deliver in the European northern sea. So he is ready to pay to get away of this deal and soon enough he is ready for his next sad gamble...

Re: Europe now has so much natural gas that prices just dipped below zero

#42

Post by TeMPOraL »

FerociousTimes wrote: post #18
ndlzk wrote: post #14

Earlier quoted context omitted.

In fact It’s unseasonably hot currently. Nobody is using heaters at all I suspect.

Where do you live?

Chiming in from Poland. There have been a few cold nights in the last week or two, but otherwise it's autumn-level warm. Today in particular was unexpectedly warm, early summer levels.

Re: Europe now has so much natural gas that prices just dipped below zero

#43

Post by msie »

anm89 wrote: post #36

Different countries have very different storage capacities. Some nations have most of their years demand in storage capacity whereas others like the UK have only a few days and require a constant flow. If you are one of the countries that can store a whole year this is great news. If you're Britain, you could still be out of gas and paying exorbitant prices a week from now

Heh, how's Brexit working out for them? BTW has Nigel Farage paid for his lies?

Re: Europe now has so much natural gas that prices just dipped below zero

#45

Post by [deleted] »

csours wrote: post #12

You have different markets essentially - there is a market for delivery, and a futures market. The market for delivery briefly went price negative. This is dominated by what is in the pipeline right now and what volume of gas is being pulled from the pipeline right now. The futures market is still positive. This market is served by LNG and gas that is still in the ground. The price here is dominated by risks. --- The…

[deleted]

Re: Europe now has so much natural gas that prices just dipped below zero

#46

Post by aschearer »

dr_faustus wrote: post #31

I really don't understand the doom and gloom wrt next year. What was obviously completely underestimated was the elasticity of consumer demand for gas. In Germany, consumers are using 25% less gas even if you account for the weather. So with increased supply from Netherlands and Norway, even a limited amount of LNG will probably be enough to fill the storage again and compensate the missing Russian gas (which account…

The doom and gloom makes more sense when considering who benefits from pushing that narrative.

Re: Europe now has so much natural gas that prices just dipped below zero

#47

Post by landoftheice »

dr_faustus wrote: post #31

I really don't understand the doom and gloom wrt next year. What was obviously completely underestimated was the elasticity of consumer demand for gas. In Germany, consumers are using 25% less gas even if you account for the weather. So with increased supply from Netherlands and Norway, even a limited amount of LNG will probably be enough to fill the storage again and compensate the missing Russian gas (which account…

If by consumer you mean only residential households then yes I agree. But if you enjoy consuming the products of or enjoy the benefits from the many wonders of German industry and manufacturing then underestimate no more.

Re: Europe now has so much natural gas that prices just dipped below zero

#48

Post by hef19898 »

remus wrote: post #40
qeomash wrote: post #35

Can anyone ELI5 on to why are we paying so much for it then?

Copying my answer from another comment: The spot price is about supply and demand over an extremely short time period and has dipped below zero because at the moment gas storage in europe is very full, so if you've got a load of natural gas to sell no one is buying because there's nowhere to put it. This is probably related to unseasonably warm temperatures in Europe at the moment, so people are using less gas than e…

Also, gas providers filled up storage and secured volumes at high prices. Even if they now buy for way less, customer prices will be an average (at least, depending on exactly how providers calculate costs and thus prices) of those two. So until the old inventory is consumed, consumer gas prices won't move a lot.

Overall, this is good. As a consumer you want stable prices and not depend on spot and future markets fluctuations.

Re: Europe now has so much natural gas that prices just dipped below zero

#49

Post by Denvercoder9 »

behringer wrote: post #37
dr_faustus wrote: post #31

I really don't understand the doom and gloom wrt next year. What was obviously completely underestimated was the elasticity of consumer demand for gas. In Germany, consumers are using 25% less gas even if you account for the weather. So with increased supply from Netherlands and Norway, even a limited amount of LNG will probably be enough to fill the storage again and compensate the missing Russian gas (which account…

I imagine you'd be using gas if you were paid to use it. Sadly market prices in the consumers favor seems to rarely make it to actual consumers.

At least in the Netherlands you can get a energy contract with dynamic pricing, where you pay the actual market price (plus tax) at time of use. When energy prices go negative, you'll also get paid.

However, this is a knife that cuts both ways: if the energy market prices rise sharply, you'll also immediately have to pay higher prices and don't benefit from the contracting ahead-of-time and averaging that regular energy companies do. I've spoken to people with such a contract whose energy bills went up by >100x this year, compared to last year.

Re: Europe now has so much natural gas that prices just dipped below zero

#50

Post by arbuge »

dr_faustus wrote: post #31

I really don't understand the doom and gloom wrt next year. What was obviously completely underestimated was the elasticity of consumer demand for gas. In Germany, consumers are using 25% less gas even if you account for the weather. So with increased supply from Netherlands and Norway, even a limited amount of LNG will probably be enough to fill the storage again and compensate the missing Russian gas (which account…

> We, too, have not switched on the gas based heating yet. Instead, we are using a mix of wood and infrared electrical heaters

In the event that your electric power is derived from gas, you've shifted the burden elsewhere and actually increased overall gas consumption, since using gas to warm your home directly would be more efficient.

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