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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

#121

Post by Dylan16807 »

sorokod wrote: post #106
Dylan16807 wrote: post #77

Earlier quoted context omitted.

One of the important factors in ensuring heating is keeping the movement of gas from being too unpredictable. One of the important factors in keeping it affordable is having a stable supply.

Stable supply is not what we are looking at here.

Storage is a factor in supply. The storage is having trouble, so this costs more money, which means it's going to be harder to afford heating even if the gas doesn't run out. That's why smoothing out fluctuations is relevant to people that "only care about having heating".

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

#123

Post by sorokod »

Dylan16807 wrote: post #121
sorokod wrote: post #106

Earlier quoted context omitted.

Stable supply is not what we are looking at here.

Storage is a factor in supply. The storage is having trouble, so this costs more money, which means it's going to be harder to afford heating even if the gas doesn't run out. That's why smoothing out fluctuations is relevant to people that "only care about having heating".

What do you mean by "storage is having trouble"? Are you thinking of an alternative?

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

#124

Post by bluGill »

matai_kolila wrote: post #80
remus wrote: post #40

Earlier quoted context omitted.

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…

Can I take a stab? If I just so happen to have decent storage capacity for this gas I could make a killing, except if I did have that storage, I would have already had long term contracts to fill that storage/keep it full given the uncertainty in Ukraine so there's not really any place for this gas to go, but they're still producing the gas and it's hard to just stop doing that so for a little bit the gas companies w…

Almost. If you had long term storage you would be following the market yourself. There is a good chance that you are the one who paid for this gas months ago when it left port, expecting to sell the gas you currently have in storage and refill it with shipments arriving today. So odds are you lost money today.

Note that the above was a good and reasonable bet to make. You should have already known the risk that this would happen and so are not surprised. You still expect to make money of the year, just not as much.

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

#125

Post by netrus »

labrador wrote: post #122

What's wrong with storing it on a ship? Anchor it and pay a skeleton crew to keep it operational.

I cannot imagine a happier person right now than the owner of a LNG tanker. Sure, using it as a dumb storage is a good business, but it's sure a better business to move the ship around to do arbitrage between gas markets with crazily different prices.

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

#126

Post by Dylan16807 »

sorokod wrote: post #123
Dylan16807 wrote: post #121

Earlier quoted context omitted.

Storage is a factor in supply. The storage is having trouble, so this costs more money, which means it's going to be harder to afford heating even if the gas doesn't run out. That's why smoothing out fluctuations is relevant to people that "only care about having heating".

What do you mean by "storage is having trouble"? Are you thinking of an alternative?

The price going wonky is the trouble at hand.

I am not thinking of an alternative unless "having more storage" counts.

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

#127

Post by ShivShankaran »

jefftk wrote: post #5

Normally you run storage facilities neither all the way full nor all the way empty: you want to be able to smooth out fluctuations in supply and demand. Because of the war Europe is running gas storage near its upper limit, which means we should expect less flexibility and more price volatility: they won't want to draw them way down if we get a serious cold snap, and they have nowhere to put extra gas if it's warmer…

another big reason is the difference in pricing between pipe and shipping. With pipe it's instant while with ship the spot pricing is before the ship start it's journey from the filling port. Added to the complexity that in EU all the ships with natural gas are stuck at ports because unloading capacity has not been upgraded.

Combining both has reduced the spot prices so that more gas is not sent. It does not reflect the real demand which we are going to have in few months or the volatility.

if you like volatility, natural gas is the best product. One contract is around $60k and could net you thousands in minutes if you play it right.

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

#128

Post by bluGill »

rybosworld wrote: post #83

This is not entirely related to the article: Rising temperatures should reduce demand for fossil fuels as a heating source (I think). Does anyone know if this is already factored into global warming predictions?

It will also raise demand for whatever runs air conditioners. This is all factored in.

What isn't factored in (guesses are, but we have no idea to know what guesses are right) is how much will we become more efficient, or how fast we will switch to renewables. This year heat pumps were very popular to install in Europe this summer, and they are more efficient, so all models need to be updated. Predictions that are more than a few years out are all being updated for expected growth in EVs, solar, and wind - all of which are growing (probably in expected range or your predictions so far, but all above the expected values)

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

#129

Post by behringer »

Denvercoder9 wrote: post #49
behringer wrote: post #37

Earlier quoted context omitted.

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 ene…

Seems incredibly risky to take without any storage tanks!
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