The expert explained the sharp jumps in gas prices on the European stock exchange

MOSCOW, 29 Aug – PRIME. The sharp jumps in gas quotes on the European stock exchange can be explained by the actions of speculator traders who provoke bullish and bearish trends in the market, Sergey Kolobanov, deputy head of the Economics of Fuel and Energy Sectors department of the Center for Strategic Research, said in a commentary to RIA Novosti.

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Gas futures prices in Europe after jumping on Friday – for the first time since March – above $3,500 per thousand cubic meters at auction on Monday lost more than 20%, fell below $2,800, according to data from the London ICE exchange.

“Sharp jumps in stock quotes indicate a significant share of the speculative component in the price of gas. A certain number of traders take part in the auction, whose task is solely to enrich themselves on the shortage of gas. When information is negative for gas supply, they buy futures in the expectation of a further rise in prices” , the expert noted.

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He recalled that there was practically no positive news on the gas market in summer. On the contrary, rising heat, problems with Gazprom’s equipment, limited LNG supplies, low gas reserves in European storage facilities, and difficulties in supplying other types of fuel to power plants due to the shallowing of rivers provoked bullish sentiment in the market, Kolobanov said.

At the same time, according to the CSR analyst, in recent days information has begun to appear that suggests a decrease in demand for gas. These include forecasts for a decrease in temperature, and accelerated occupancy of storage facilities, and a number of news about the shutdown of enterprises and austerity measures (including those forced due to prohibitive prices), as well as statements by a number of high-ranking politicians from EU countries about the need to limit prices for gas and electricity, the expert added.

“In such a situation, speculator traders began to rapidly “dump” their volumes, fixing profits and provoking the so-called “bearish” trend, which led to an abrupt drop in gas prices from the highs recorded last week,” he concluded.

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Exchange prices for gas as of 17.23 Moscow time decreased by 16.7%, amounting to 2921.1 dollars per thousand cubic meters. The dynamics of quotations is based on the settlement price of the previous day – $ 3,507.3 per thousand cubic meters, which has become a record for the entire period of operation of gas hubs in Europe – since 1996.

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