European natural gas prices go down for second week

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European natural gas prices go down for second week

European natural gas prices went for a second straight week as Russia tightened markets and pressured governments to bring back coal power stations.

Benchmark futures are up about 12% this week. The European powerhouse Germany, which has moved to the second-highest phase of an emergency plan, warned of the cuts, which could cause a Lehman Brothers-like collapse of the energy market.

The main Nord Stream pipeline, which is currently used only 40% of its capacity to supply to Europe, is due to be shut down for maintenance next month. Germany's Economy Minister Robert Habeck has raised doubts that the country s target of getting 90% of storage sites full by November can be met if flows through the pipeline are curbed.

The impact is threatening economic output in the region, and is reverberating through the industry. Europe's biggest chemicals maker, BASF SE, which relies on gas for production and electricity, said it may cut output as it expects further price rises. BMW, the world's biggest luxury carmaker, which runs combined heat and power plants at many of its sites, is taking measures to reduce consumption.

After Russia invaded Ukraine, Germany has become the hotspot of the EU energy crisis, Henning Gloystein, director for energy, climate and resources at the Eurasia Group, said in a note. A total supply cut from Russia to Germany would risk the security of supply throughout the EU, potentially leading to a recession and widespread winter energy rationing. Dutch front-month gas futures, the European benchmark, fell 1% to 132 euros per megawatt-hour at 9: 12 a.m. in Amsterdam, trimming the weekly gain. Since the Nord Stream flows were curtailed, prices have gone up more than 50%. The equivalent contract in the UK rose by 4.9%.

There is no age of credibility for central banks that is over.