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‘Beast from the East’ chill may boost energy demand in Europe
[LONDON] The same weather pattern that caused a Siberian blast of cold air dubbed the "beast-from-the-east" could re-emerge in Europe at the end of this month, boosting demand for energy.
A sudden stratospheric warming appeared at the start of January, which usually results in a rush of cold air eastward a few weeks later. A similar system blasted the European Union with its biggest chill since 2010 in early 2018, tripling the spot natural gas over the course of a week, sending electricity higher.
The forecasts would herald the first significant cold snap for the winter heating season in Europe, where a mild autumn has pared back purchasing of gas and power. A slower start to the period when demand is highest has allowed traders to rebuild gas inventories that through the summer were below the five-year average.
"A strong cold snap would still trigger a spike in EU gas prices," said Elchin Mammadov, analyst at Bloomberg Intelligence. "Yet, the hike won't be anywhere near the levels seen last year given ample volume of gas in storage and weak global LNG market."
Temperatures dipped below normal last week and are forecast to dive again at the end of the current forecast horizon, as the chart below shows. The brunt of the cold snap may be just beyond.
The data from forecasters from The Weather Co. and Meteogroup UK Ltd. shows the first half of January is likely to be warmer-than-usual for northwest Europe. The risk of colder temperatures comes around Jan. 10.
A short-term increase in demand won't be enough to absorb all the increased flows of gas coming from Russia and arriving in Europe by ship as LNG.
"As for the energy markets, much will depend on the extent and magnitude of the cold phase," said Giacomo Masato, an analyst and meteorologist at Marex Spectron Group Ltd. "If one between ‘persistence' and ‘very cold' is met, energy prices will definitely react regardless of how good supply is."
Snow is most likely over Scandinavia as well as east and south-east Europe during the first half of January. Then, colder conditions shift over the northern half of Europe later in January or early February, increasing the threat of snow, according to Matt Dobson, an energy meteorologist at Meteogroup.
In the UK sudden stratospheric warmings tend to increase the chances of colder weather "a couple of weeks" after they start, according to the Met Office. The forecaster is predicting an increased likelihood of "much colder weather" for the end of the month, with an enhanced risk of frost, fog and snow.
Although the same conditions are emerging, the cold may not be as extreme as last year, according to Hannah Findley, meteorologist at the Weather Co.
"There'll be cold days, but probably not as prolonged" as last February, she said. "There's a chance the cold periods will have moderation in between."
Italy is already feeling the chill with temperatures in Rome falling as much as 4.4 degrees Celsius below normal, according to Radiant Solutions.
A warmer-than-average December concluded a mild year for most of Europe with record-breaking heat in some places. Germany experienced one of its driest and warmest years on record while Sweden had its hottest summer ever.