Will Europe freeze in winter? Gas storage is empty, and coal prices have skyrocketed!

Complex and contradictory dynamics are being observed in global commodity markets. While oil prices have trended downward against the backdrop of the geopolitical situation around Iran and expectations regarding the US Federal Reserve's interest rates, natural gas prices in the European Union remain dangerously high.

The lack of full readiness of European countries for the heating season and the significantly lower underground reserves compared to last year have sharply increased demand for alternative fuel — coal — on the continent.

Oil market: Fell below $90 per barrel

A decline in 'black gold' quotations has been recorded in international markets:

• Price movement: The price of the North Sea Brent benchmark fell over the week from $92.4 to $89.3 ;

• Fed and interest rate impact: Phil Flynn, a senior analyst at Price Futures Group, noted that statements by US Federal Reserve official Kevin Warsh regarding a possible interest rate hike at the end of the year accelerated the price decline;

• Strait of Hormuz and Venezuela factor: Rumors about Iran-Oman agreements and the opening of the strait, as well as Donald Trump's statement regarding a mega-deal with Venezuela for fields with 65 billion barrels of reserves, temporarily eased market anxieties.

Europe's gas trap: Storage empty, prices doubled

Anxieties are mounting in Europe ahead of the heating season:

• The $800 barrier: On the Dutch TTF exchange, gas per thousand cubic meters fell slightly from $815 to $806 , but remains firmly above the dangerous $800 mark;

• Reserve deficit: European companies were late to increase imports. Currently, reserves in storage are 14 billion cubic meters lowerthan in the same period last year;

• Tens of billions of dollars in overpayments: Supply quotations have more than doubled compared to last year. As a result, the European Union will be forced to spend tens of billions of dollars in excess for gas imports this season.

Return to coal: Alternative energy is getting more expensive

The excessively high price of gas is forcing the continent's industry to turn back to coal:

• Price jump: The price of coal for one-month delivery from the Antwerp-Rotterdam-Amsterdam (ARA) hub rose from $125.2 per ton to $131.5;

• Winter test: Such price increases in the gas and coal markets indicate that the upcoming winter season will be extremely difficult for European industry and the population.