Late Cold Snap in Europe Causes Another Energy-Market SurgeBy
Temperature not seen falling as low as at end of February
Cold temperatures seen coinciding with lower wind power output
European natural gas and power markets surged Monday on forecasts for a late winter cold snap.
April natural gas in the U.K. had its biggest ever jump, as did power contracts for the month in Germany, France and the Nordic region. While it isn’t expected to be nearly as cold as when the “beast from the East” brought polar air to Europe two weeks ago, there is a lot less fuel in storage to help meet the increased demand.
“We are facing this cold spell with storage reserves in much worse shape than the previous cold snap of late February,” said John Twomey, an analyst at Bloomberg New Energy Finance. “We were already expecting storage to end the winter at a multiyear low -- now this late March cold snap has the potential to run storage down to dangerously low levels.”
Average temperatures in northwest Europe are expected to drop below freezing Sunday, before climbing slowly through next week. The increase in energy demand may coincide with lower levels of power generation. Output from wind turbines in Germany is expected to be almost 70 percent less than around the peak of the previous cold snap on March 1 while French nuclear-power output is hampered by outages.
— With assistance by Jesper Starn