Since the beginning of 2021, the wholesale price of natural gas in Europe has soared to nearly five times that in 2019. According to records dating back to 2010, the average electricity price in the UK in September reached 189.1 GBP / MWh, the highest since 2010, almost more than three times that of the same period in previous years. China's "coal shortage" has further raised the global price of thermal coal. Brent crude oil broke through the threshold of $85 / barrel in late October, the highest level in seven years. Since the beginning of the year, it has increased by more than 50% so far. Goldman Sachs said that this is the beginning of many years of "structural bull market" in the oil industry.

Compared with China's use of coal as the basic energy, the proportion of natural gas consumption in Europe's dependence on petrochemical fuels is much higher than that of coal.

In the face of gas shortage, coal shortage, oil shortage and power shortage, as well as global inflation exacerbated by the soaring global energy prices, many experts believe that a global energy crisis is taking shape. However, James Henderson, director of the energy transformation research project of Oxford Energy Research Institute, told China Newsweek that the current shock in the global energy market can not be regarded as a crisis, but "the market's major response to a series of factors, which appear at the same time, resulting in a certain shortage."

Intertwined global energy markets

Natural gas prices in Europe have been rising since June 2020. After the winter peak in January 2021, according to the periodic law of natural gas prices, they will fall back to the low point from May to June every year, but they will rise all the way this year. By early June, the Dutch TTF center price, as the benchmark price of European natural gas, had reached 25 euros / MWh, compared with about 5 euros / MWh in previous years.

According to the third quarter international natural gas price report of the International Natural Gas Association, the spot price of natural gas in Europe increased by 357% in the first nine months of this year. In the third quarter, the price of natural gas in Europe increased by 2.5 times. Europe's natural gas market has become the center of global energy shocks. According to expert analysis, the imbalance between supply and demand is the direct inducement.

From the supply side, many adverse factors are superimposed in 2021, first of all, special weather. Lu Xiao, deputy director of natural gas research in Greater China of IHS Markit, analyzed China Newsweek that the winter in Europe last year was cold and long, and the low temperature continued until May this year. There was more heating gas than in previous years, consuming a lot of inventory. At the same time, affected by the fierce competition in the Asian market, Europe began to inject gas into gas storage on a large scale in mid and late May, more than a month later than in previous years. China, Japan, South Korea and other countries are crazy to replenish gas, which is related to the energy structure of Asian countries and the strong demand for economic recovery.

The report of the International Natural Gas Association pointed out that Asia absorbed more than 70% of the total global LNG exports, resulting in a slowdown in delivery to Europe in April and may, and imports have been declining since June.

Three quarters of the EU's natural gas consumption depends on imports from Norway and Russia. Qin Yan, chief analyst of luffat power and carbon, pointed out to China Newsweek that Europe's own gas production has decreased this year, Norway's stamina is insufficient, and Russia's natural gas supply to the European continent has been reduced, which is not as flexible as in the past. Finally, Europe can only rely more on imported LNG (liquefied natural gas), and European buyers need to bid higher to grab goods from Asia. Therefore, In the case of tight supply and demand, the high spot price of LNG in Asia further stimulated the price of natural gas in Europe. The failure of replenishment exacerbated the panic of the market and further raised the price.

Wang Nengquan, member of the national energy expert advisory committee and chief researcher of the economic and technological research center of Sinochem Group, believes that on the demand side, there are two "unexpected" this year: one is that the wind and rain in Europe in summer are less than in previous years, and the other is the degree of world economic recovery.

According to the data of Eurostat, the proportion of renewable energy power generation in Europe has reached 38% in 2020, surpassing fossil energy for the first time. However, since the beginning of 2021, the offshore wind speed in Europe has dropped sharply for a long time, and the wind power generation has dropped sharply. Denmark's worsted, the global offshore wind power giant, said that the wind speed from April to June this year was "far below normal", ranking one of the worst three quarters in more than two decades. Renewable energy is not available. Most countries in Europe suck up the pace of coal very quickly, so the importance of natural gas in the energy structure is highlighted. At present, natural gas accounts for about a quarter of the EU's total energy consumption.

On the other hand, the global economic recovery is faster than expected, especially in Asia, resulting in strong growth in energy demand. The International Monetary Fund predicts that the global economy will grow by 6% in 2021, enough to make up for the decline of 3.5% in 2020. But even so, if only from the perspective of supply and demand, the actual gap is not enough to explain the current "unprecedented" high price of natural gas.

Zhou Dadi is the former director of the Energy Research Institute of the national development and Reform Commission and vice director of the China Energy Research Association. He analyzed China Newsweek. Since the two years of COVID-19, the United States and other countries have launched a large-scale issue of money, but production activities have not kept pace. The inflation in the world is first manifested in the rise in commodity prices, from grain, steel to oil, Natural gas and other fields have been affected, especially in the field of energy.

He also pointed out that the pricing mechanism of energy prices such as natural gas and oil is futures to guide spot. There are many speculations in the market, which has actually become a financial market. In this round of inflation, the panic "expectation" of the future market has significantly amplified the trend change between supply and demand. For example, the demand for natural gas increases by 2%, but the price may rise by 20% ~ 30%. In short, the high price of natural gas is "fried" to some extent.

Qin Yan also observed that 1 / 3 of the global natural gas price increase in this round is related to the trading of financial derivatives such as futures and options. Her lufute, under the London Stock Exchange Group, is the world's largest financial market data provider. Qin Yan found that at the beginning of October, the price of European TTF (Dutch natural gas virtual trading center) rose to more than 100 euros / megawatt hour at once, because there were many speculative positions of large investment institutions, often hundreds of millions, and the portfolio of these futures and options amplified the volatility of the market.

Starting with the sharp rise in global natural gas prices, it has triggered a series of increases in energy prices and electricity prices, which are not single-line, but intertwined. The first is the power shortage and high electricity price caused by the reduction of wind power in Europe. Meanwhile, the European Union, which has the world's largest carbon trading system (ETS), tightened the trading of licenses this year, pushing up the price of carbon emissions. Power plants therefore tend to choose natural gas with relatively low carbon emissions rather than coal, raising natural gas prices. With the soaring price of natural gas, power plants retreat and choose to burn coal, which further exacerbates the rise of carbon price.

As carbon prices in Europe and natural gas prices soar simultaneously, global coal and oil prices are also rising.

In early October, China's thermal coal futures reached a record high of about 1700 yuan per ton. In the United States on the other side of the Pacific, coal prices have risen by 400% this year. Due to the high price of natural gas, the United States has restarted coal power plants. Bloomberg data show that the coal consumption of U.S. power producers is expected to increase by 19% this year, while the U.S. coal supply will be at a 20-year low before winter, and almost all the coal produced in 2022 has been scheduled to be sold. In addition, the price of thermal coal in the three ports of Ara in Europe also rose from US $67 / ton at the beginning of the year to US $268.5/ton in mid October.