EU’s financial markets supervisor, the European Securities and Markets Authority (Esma), has released a report on the surge in European natural gas futures prices in August 2022.
According to the report, the surge was primarily an result of the Russia-Ukraine war, which introduced uncertainty and eventually resulted in disruptions in Russian gas supplies.
Despite the record-breaking gas prices in August 2022, the findings reveal that there was no corresponding spike in illiquidity. “CCP margins rose and fell with prices and volatility in line with expectations, with margin calls met on time. There were no signs of reductions found in derivative positions during this period,” it stated.
These factors suggest that the markets continued to operate effectively during the August 2022 events, Esma added.
The study also identified strong demand among end-clients, with trading volumes only slightly lower than the previous year despite the substantially higher prices.
Emphasis was placed on contracts for autumn and winter deliveries. Different trading behaviors were observed among market participants, including natural gas producers, electricity utilities, and banks. According to Esma, these findings align with the strong demand from European end-clients, driven by the urgent need to replenish winter reserves due to a significant decrease in Russian pipeline supplies, contributing to price increases.
Esma analysed the rgas price surge by studying market data, including prices, volatility, CCP margins, and their impact on cleared positions, liquidity, and market behaviour. The study was conducted in association with the Agency for the Coordination of European Energy Regulators.
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