Prepare for the energy price shock

Concerns about the natural gas supply continue to fuel fears and push futures contracts higher. October’s Nymex contract was trading above 17 cents on Wednesday, and Europe is the center of attention.

Natural gas prices in Europe continue to rise, and US prices are also rallying around this, responding to both European price hikes and concerns about storage capacity on both sides of the Atlantic.

Since the start of the year, the key benchmark price in Europe – the Title Transfer Facility (TTF, a Dutch virtual hub) – has shown an increase of 245% and a staggering increase of 520% ​​year-on-year, on the database of the latest data shared by Standard Chartered.

LNG exports are not ready to intervene to remedy this.

We have now reached a point where Americans may need to adjust their geopolitical thinking on the Gazprom-led Nordstream 2 pipeline in Russia. This is precisely where geopolitics touches the portfolio, but not in the way that fits into the American narrative against Nordstream and the political influence Putin could give over Europe.

Even a consistently cold winter in Europe will push prices up even further – which rose another 10% on Wednesday. Anything slightly cooler than the norm will be a price shock of new proportions.

Another factor is Nord Stream itself. Prices jumped again on Monday in part in response to news that it could take four months to get Nord Stream up and running. Just before that, …