European Gas Prices Plummet.....


European gas prices in January

With the end of the winter just 4 week away, the gas prices in Europe did not skyrocket as anticipated by both investors and analysts - and feared - by the ruling elite.

On the contrary, they have not just been falling, but plummeting. The price of gas that already had lost 50% from its peak last year, fell by 11% on Tuesday as the markets opened for business.

A fall of this magnitude that does not translate automatically to drop in domestic or industrial scale bills, can put further pressure on politicians to act on behalf of the consumers and of course, small-to- medium scale businesses. 

It is clear that the energy companies are entirely not to be blamed on the high energy prices, because the data supports the fact that their profit margin remains around 19% with the government taxes accounting for big chunk as far as oil prices are concerned.

The OPEC displayed the data to show the latent money 'trail' :

Taxes on crude oil
There are a few key factors behind the fall of natural gas - LNG - price: the winter in Europe is going to end soon and the forecast for the next few days is going to be fairly mild with the temperature staying above the season's normal by 4 to 5 digits; the European gas reserves remain full to the capacity, as they took precautionary measures to boost stocks while turning their back on Russian gas; in addition, the gas supplies - and stocks -  are strong across the continent; a major gas hub in the US, meanwhile, is going to be operational in February, leaving the supply woes in the gas markets just a thing of the past.
Although there was a cold front a few days ago, neither the price of gas nor that of oil did not go up substantially. In this context, the arrival of yet another cold front from the Arctic is not going to change the dynamics of the gas markets - and those of the crude oil markets for that matter.

European weather in January

The fall of gas prices, as the recent data explicitly shows, is a drag on the price of crude oil; it has barely moved above $80 in recent weeks. 

As this is the case, investors and analysts hope for a steady Covid-19 recovery in China, despite the rising infections. China appears to be taking the Western concerns on renewed infections with a pinch of salt; the former believes that the current Spring Festival will encourage consumers to spend more in order to revive the trades.

If China recovers, it will certainly lubricate the global economy machine and provide the crude oil markets with the much needed catalyst. 

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