Energy Spotlight: European gas benchmarks sent soaring again by Russia, Crude makes small gain

Fri 29 Jul 22, 3:19pm (AEST)
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Key Points

  • Brent Crude holding around $107/bbl as prices travel upward on supply tightness concerns
  • EU gas futures have returned to levels near the all-time-high hit in March of 2022, eyeing EUR200 per megawatt hour
  • UK gas futures also at four month highs

Another tame week for crude with some small gains, and another chaotic week for gas futures defined energy international energy markets this week. 

In short: the Russian side of the energy crisis has come to the fore again—we’re also seeing mostly unrelated price volatility here at home, with AEMO noting energy prices tripled in the June quarter. 

The S&P/ASX 200 Energy Index is up 1.02% heading into the last leg of trade for Friday. One year returns on the XEJ are at 30%; one week performance is up 2.85%. 

Price headwinds

  • Global demand forecasts for oil remain downgraded on a raft of different data points

  • Chinese lockdowns remain ongoing, which are both causing material decline in demand, and also affecting trader sentiment internationally

  • The rising use of coal, predicted by the IEA to hit record highs this year, is taking the wind out of hydrocarbon commodities’ sails

Price drivers

  • As for gas, renewed threats from Russia to cut its gas supply to Europe, and reduced flows, pushed UK and EU benchmarks back near record highs

  • Oil is also being boosted by concerns on global supply tightness, but not enough to meaningfully outweigh depressed sentiment on demand

The last six months of EU Gas futures (source: TradingEconomics)
The last six months of EU Gas futures (source: TradingEconomics)

Another relatively quiet week for crude oil this week (compared to its recent past) was contrasted by another hectic week on international gas markets, once again, caused by Russia. 

Russia this week followed through on its threats to cut gas supply to Europe, though, stopped short of a total withdrawal. 

The move quickly saw speculative traders put in high bids for the price of gas in the future, pushing up gas benchmarks. 

Where and when exactly this will end depends on a number of variables too numerous to list here, but ultimately starts with ‘p’ and rhymes with ‘eace in Europe.’ 

In turn, Asian markets quickly started competing for cargoes of liquefied natural gas, concerned European countries would hoard supplies to deal with Russia’s behaviour. 

By limiting gas flows through key pipelines at the turn of a valve (or hundreds,) Russia has once again flexed on world markets—something it appears the country doesn’t get bored of doing. 

Interestingly, in the background of an already tumultuous first half of 2022, the US government’s own data shows that it was the top LNG exporter in the first six months of this year, as shipments to Europe continue to boom. 

Here at home in Australia, while relatively insulated from the machinations of Europe and America (though, not Asia,) the Australian government’s market regulator has noted that wholesale gas prices tripled in the June quarter of 2022. 

With inflation expected to peak at 7.75%, consumers and businesses would be wise to set up buffers for the significantly increased power bills coming your way. 

What to look out for next week 


  • Baker Hughes US rig count data


  • Australian commodity price data 

  • Russian monetary policy report 


  • Australian central bank interest rate decision 


  • OPEC Ministerial Meeting in Saudi Arabia

  • American Petroleum Institute crude oil stock data 

  • US Energy Information refinery activity data


  • Australian balance of trade for June

  • Bank of England interest rate decision 

  • US export and import data for June 

The last six months of international Brent Crude futures (source: TradingEconomics)
The last six months of international Brent Crude futures (source: TradingEconomics)


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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