Europe has seen some remarkable energy prices in recent days with record negative electricity prices in the North Western part of the continent, while Saudi Arabia strikes again and prolongs the supply cuts into August. Read along in our weekly Energy Cable, where Steno Research and 3Fourteen Research share their thoughts on Energy markets. As usual, we don’t quite agree.

Steno Research: Negative German electricity prices a sign of what is ahead? 

At yesterday’s auction for the day-ahead German baseload electricity prices turned outright negative and we wonder if this could be a signal of deflation to come like we saw in the gas markets last fall where the short end of the curve absolutely nosedived once we realized filling the storages was not going to be a problem.

The case for interpreting this as a deflationary signal is basically the opposite side of the inflationary impulses in 2021 where both gas and electricity prices spiked. Back in 2021 M2 on y/y was going to the moon, service and manufacturing numbers well above 50 and people had their savings booming. And today…? The exact opposite.

A record negative price during peak hours in Denmark and Germany yesterday? Probably nothing…