One is inclined to talk about a “gas market crisis” or “gas market casino”, as one trader called it. The prices on the gas trading market have been escalating more and more since August. The latest price development can be found in chapter 22.214.171.124. This publication has repeatedly described the fundamental factors behind this development. The simple, short version is that tight supply meets strong demand. Covid-19 and the globally varying global economic recovery from the pandemic is one factor on the demand and the supply side. On top, extreme weather conditions, mainly in Asia and Latin America, pushed demand. On the supply side, structural changes like the dwindling gas production in Europe are one factor alongside the cumulation of outages in LNG liquefaction plants (chapter 3.2.2). This has reduced the LNG supplies. There remains the factor of Russia. In the German public discussion, Russia is subject to increasing accusations of being the main force behind the market tightness and soaring prices; it is alleged that Russia is blackmailing Germany/Europe and purposely reducing volumes to enforce the start of operation of Nord Stream 2. This is the primary argument – but more on that later.
However, fundamental factors cannot be the full explanation of the price turbulences. Especially the extreme intraday volatility is remarkable. The author of this publication does not have a trading screen in front of him. But on some trading days, traders told him almost real-time about price movements.