Norway on strike, gas prices on the rise!

2:27 PM 5 July 2022

Norway's oil and gas sector is on strike. Workers are demanding pay rises due to rising inflation. Initially, it was estimated that gas production could fall by 25%, while oil production could decrease by 15%. The reality could turn out to be even worse. The association of oil and gas producers in Norway reports that oil production has fallen by 341,000 bpd since Saturday, while gas exports have decreased by 56%. Norway is currently one of the largest gas suppliers to Europe, given the sharp decline in gas exports from Russia and still limited exports from the US to Europe (the US overtook Russia as the 1st supplier, but the recent closure of the Freeport terminal may again lead to a reshuffle).

How is the market reacting? The decline in oil production is sizable, and oil prices are falling, even as Saudi Arabia raised export prices. US gas prices are not shifting their course as well, as stockpiles are  filling up at slightly faster pace.

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

Gas prices on the Dutch stock exchange are much more responsive, where the MWh price reached €170.00. However, prices may continue to rise, given the sharp decline in exports from Russia (some even expect complete suspension of exports). Poland seems to be safe for the winter period, as the warehouses are 90% filled (usually this level was recorded at the turn of October and November). The situation is worse in other Western European countries, in particular Germany, where the warehouses are about 50% full (it is worth remembering, however, that warehouses in Germany are about 5-6 times larger than in Poland). What else is worth knowing?

  • Norway supplies as much as 13% of the daily gas flow to Europe

  • Norway is the main gas supplier to the UK, which puts even more pressure on the UK economy

  • Gazprom cut 60% of gas transfer to Western Europe via Nordstream I, full shutdown of the pipeline is planned next week due to "maintenance" reasons

  • However, the question is whether Russia will resume transfers,as it earns record amounts of money from oil. Russia earns a fortune and produces more than it did before the invasion (though still below its all-time high)

  • The gas price in Europe currently stands at € 170.00 / MWh, which equates to $ 50 MMBTU. However, the United States is unable to supply more gas to Europe due to limited export capabilities and the need to rebuild its own stockpiles

Gas prices in the US are nearly 10 times lower compared to Europe! Source: Bloomberg

Gas transfer to Western Europe via Gazprom has decreased by 60% and maintenance work is underway, which may further limit exports. However, Russia does not need to resume gas transfers, which would be disastrous for the economy of Germany and the whole of Europe. Source: Bloomberg

Share:
Back
Xtb logo

Join over 935 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 2 March 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 1 March 2025
__hssc cc 8 September 2022
SESSID cc 2 March 2024
__cf_bm cc 8 September 2022
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 30 May 2024
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
__hstc cc 7 March 2023
__hssrc

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 7 March 2023

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language