Energy prices in Europe are rising rapidly: the market is riddled with problems

Coal prices have soared to record levels as utilities burn more of the fuel. This is expected to fill the gaps caused by reduced gas supplies from Moscow. Gas futures benchmarks were not much different after the turbulent dynamics and remained close to record levels for the second day in a row.

Europe is reeling from an energy crisis fueled by Russia’s war in Ukraine, extreme weather on one of its major rivers and recovery from a global pandemic. Businesses and households face inflation and the risk of a recession not seen in decades, while governments retreat from clean energy targets to ensure they have enough fuel for the coming winter.

Rising energy prices mean “we’re going to see a sharp contraction in Europe’s economies,” Wednesday’s “Bloomberg Television,” said Amrita Sen, director of research at London-based consultancy Energy Aspects LTd. and one of the company’s founders. While many industries are rationing gas and switching to alternatives as much as possible, the burden of high prices is “enormous,” she said.

The hot and dry weather has caused the Rhine River to sink to historically low levels, hampering the transport of energy commodities, including coal. However, some relief is expected as the water in the main narrows is expected to rise above the critical level in the coming days.

German utility company Uniper SE, which announced on Wednesday a 12 billion EUR (12.2 billion USA dollars) in net losses, as it warned earlier that it may not have enough coal to operate its power plants at full capacity if the Rhine water crisis worsens.

“The active search for gas alternatives in Europe is supporting the vitality of the coal market,” with gas prices above the 200-euro mark at the Dutch TTF gas trading point, said Christopher Ward, senior energy broker at capital markets firm Britannia Global Markets Ltd. – The whole market is riddled with problems with demand and worries about recession.

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