European energy majors benefit as prices rise and inventories deplete
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ADRs of European energy companies were trading higher in the premarket on Monday as oil prices rose and natural gas prices surged to seasonal highs ahead of the winter. BP (NYSE: BP), Shell (NYSE: RDSa), and Total Energies ADRs (NYSE: TTE) were up 2.5 percent -3.5 percent as supply chain concerns, a scarcity of truck drivers, increasing demand, and the beginning of winter all combined to push energy prices to levels not seen in years.
The STOXX Oil & Gas index rose 1.8 percent to a three-month high as Brent futures approached $80 a barrel amid supply concerns. Brent prices for December delivery were 1.3 percent higher at $78.25 at 0600 ET. So far this month, prices have risen by more than 8%. Citigroup (NYSE:C) more than quadrupled its Asian and European natural gas predictions for the coming quarter, warning that a hard winter might push prices up to $100 per million British thermal units.
LNG prices are skyrocketing due to extremely low European inventories at this time of year. At the same time, demand from China has increased due to the country’s developing economy and pollution-related limits on coal-fired power plants. According to Bloomberg, the world’s largest importer’s LNG imports are nearly double what they were last year. The situation in the United Kingdom has deteriorated, with up to 90% of fuel stations running dry on Monday as a result of panic buying, which exacerbated a localised supply chain issue.