It's been a wild ride in European natural gas today.
There's a game of chicken going on at the moment between Russia and Europe. The latest headline is that Russia's Gazprom has informed Bulgaria that it will halt gas supplies as of April 27 if it doesn't pay in rubles.
Three things can now happen:
- Europe pays in rubles
- Russia abandons its demand
- Russia cuts off the gas
The taps are set to be turned off tomorrow. Europe has been talking tough about surviving without Russian gas. Thanks to a mild winter, they have some inventories but in six months we'll be back into heating season and those inventories will be gone fast.
The US is talking about more LNG but there simply isn't the capacity.
European energy-intensive companies can't continue to be pay high prices for gas and electricity and remain competitive. The odds of a European recession are growing but what happens next depends on what happens next on gas.
The TTF chart is coiled:
