In the months after Russia’s invasion of Ukraine any hint of bad news sent energy prices into the stratosphere. When a fire forced an American gas plant to close, strikes clogged French oil terminals, Russia demanded Europe pay for fuel in roubles or the weather looked grimmer than usual, markets went wild. Since January, however, things have been different. Will oil and gas remain cheap?
Brent crude, the global oil benchmark, has hovered around $75 a barrel, compared with $120 a year ago; in Europe, gas prices, at €35 ($38) per megawatt-hour (mwh), are 88% below their peak in August.
It is not that the news has suddenly become more amenable. Oil and gas remain cheap despite the trends. The Organisation of the Petroleum Exporting Countries (opec) and its allies have announced swingeing cuts to output. In America, the number of oil and gas rigs has fallen for seven weeks in a row, as producers respond to the meager rewards on offer. Several of Norway’s gas facilities—now vital to Europe—are in prolonged maintenance. The Netherlands is closing the largest gas field in Europe. Yet any uptick in price quickly fades away. What is keeping things steady?
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