European Union is working on a gas price cap above the current market price. EU proposes 275 euros/MWh for the TTF ( Title Transfer Facility - a benchmark and pricing location in the Netherlands). The current TTF for December 2022 delivery is 115.050 euro/MWh, and January 2023 delivery is 121.200 euro /MWh; the cap is 126% above Jan delivery prices. The price cap will be used under a mechanism when two conditions are met:
The front-month TTF derivate settlement price exceeds €275 for two weeks;
TTF prices are €58 higher than the LNG reference price for 10 consecutive trading days within the two weeks.
What is clear is that the EU has concerns regarding gas prices reaching summer highs again. In addition to the cold weather and energy consumption rates, Gasprom ( Russian gas supplier) may cut part of its gas flow to Ukraine as they stated that volumes meant for Moldova are kept in Ukraine, and pressure is increased on the European continent while actual cold weather is knocking on the doors.
Gas prices affect industries that depend on high energy consumption (for example, Steel and fertilizers producers); earlier on 25 August 2022, Yara International ASA, the world's largest fertilizer producer, announced they are reducing ammonia production due to high gas prices.
On our side, the Suez Canal numbers showed an increase of 38.4% during October 2022 on petrol vessel movement to reach 590 vessels Vs. 426 vessels in October 2021.
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