A gap higher and 11% gain in European benchmark TTF natural gas prices led to a record close today. Intraday, it was only exceeded by the wild spike squeeze on October 6.
In November, it had looked like natural gas prices in Europe were set for a breakdown as Russian supplies picked up but that proved to be a false alarm and there continue to be delays sanctioning Nord Stream 2. Since then, there was a double bottom at $63 and prices have doubled from there. That ensures it will be a very expensive winter for European consumers, not just for heating but also for electricity.
European governments have responded with subsidies, which will keep any demand destruction at bay.
The rise in gas and power add to the inflationary mindset that's building in Europe. That could complicate the picture for the ECB in the months ahead, particularly if omicron hits supply chains.
