Rising Energy Costs This Summer: What to Expect in Electricity, Gas, and Oil

The energy market is showing signs of upward price trends as summer approaches. Following the European Commission’s announcement regarding its plan to reduce dependence on Russian gas, there has been a noticeable reaction in the Dutch TTF futures contract prices for natural gas, jumping from €32 to €35. For several months, gas prices had been hovering between €31 and €33 but have now broken through this range. This shift may indicate a gradual return of investors and speculators to the TTF after significant exits over the past two months. Consequently, the new Commission plan could counteract recent measures like easing requirements for filling European gas storage facilities this year, reducing the obligation from 90% to 83% before next winter. The goal is to prevent EU markets from being easily manipulated. Meanwhile, broader energy prices are trending upwards ahead of the summer season. Despite geopolitical tensions in areas like Kashmir, oil remains low-priced, though traditional seasonal demand increases are expected to push prices higher. U.S. oil production announcements might also drive further tightening. In electricity, Europe anticipates facing drought conditions again this year, impacting hydroelectric power production and driving costs up. Reservoir levels in our country are already 14% lower year-over-year, reminiscent of last year’s mini-energy crisis that hit Northern Europe in July. It remains to be seen whether regional government measures will suffice to avoid a repeat of last year’s scenario.