Europe’s big gas traders and exchanges have warned that a proposal by Brussels to cap futures that help set prices in the EU will create “major risks” to the bloc’s financial stability and energy supplies.
According to a draft proposal, seen by the Financial Times, the European Commission is planning to set a cap for the most widely-used gas futures contract in an effort to calm markets and avoid a return to the “abnormal” prices of more than €300 per megawatt hour that the bloc briefly experienced in August — a price equivalent to more than $500 a barrel for oil.
EU officials want to reform the workings of Europe’s gas market, arguing that futures linked to TTF, Europe’s wholesale gas price, had become detached from gas prices in other markets, particularly for liquefied natural gas being shipped into the bloc. TTF futures are based in the Netherlands and run by US group Intercontinental Exchange (ICE).