It's tough to see how Europe can avoid an energy crisis this winter
Gas and electricity prices continue to soar
The last few months have consistently seen European economic data surprise to the upside but a looming drag is on the horizon.
Natural gas prices are absolutely soaring and continued higher today.
Prices for power are 2-8% higher across Europe today and up around 70% year-to-date. These are record or near-record prices everywhere and we're nowhere near peak winter demand. In the UK, it's even worse with prices above £200 per MWh. There's even talk of baseload prices at £354 compared to the average of £45 from 2010-2020.
The natural gas market is grim, with TTF benchmark prices up another 5% to a fresh record, having gained 20% since the start of the month.
These costs are undoubtedly going to dig into consumer spending in the months ahead. Moreover, they're a major political risk and I expect we'll see all kinds of interventions into markets.
There's hope that Nord Stream 2 can stem the gas shortage but with Russian inventories also low and time running out, I struggle to see it.
Follow Javier Blas for more charts on just how extreme this is getting. This almost feels like sleepwalking into a crisis and no one is even talking about it.