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Oxford Paper Links Gas Price Hike in Europe to Cold Winter Fears

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MOSCOW (Sputnik) - The ongoing surge in gas prices across the world, most notably in Europe, is caused, among other things, by fears that the upcoming winter will be as cold as the previous one, the Oxford Institute for Energy Studies (OIES) said in a fresh publication on Monday.
Spot prices for gas have been on the rise in Europe since early 2021, ranging from historic lows to unprecedented highs. Over the past year, imports of both natural gas and liquefied natural gas (LNG) have declined in Europe, with the trend accompanied by a drop in European production, the institute said.
"Therefore, we conclude that with both the global LNG market in general and the European market in particular noticeably tighter, the ongoing price rally is driven by fundamentals, with an added ‘fear premium’ that the forthcoming winter could be as cold as that in 2020/21," the OIES report said.
The authors believe that if their hypothesis proves right, the prices will continue surging. Conversely, if the winter turns out mild, gas will slightly drop in price, subject to a range of supporting criteria. These include a reasonable performance of non-gas power generation units, the return to higher levels of output of several currently underperforming LNG export plants, and a rebound in Russian pipeline supplies to Europe.
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