Europe Gas Prices Hit 2-Month Low 'Gas Storage Rate at 86%'

German Chancellor Scholz Likely to Sign Gas Supply Agreement with UAE During Middle East Tour

[Image source= Bloomberg]

[Asia Economy Reporter Park Byung-hee] European natural gas futures prices fell to their lowest level in nearly two months, Bloomberg reported on the 19th (local time). Analysts suggest that the European gas market is stabilizing somewhat as efforts to secure alternative sources of Russian gas in Europe are progressing more smoothly than expected.

On that day, natural gas futures prices at the Netherlands TTF exchange dropped 6.5% compared to the previous trading day, reaching 175.5 euros per megawatt-hour (MWh). This is about half the closing price of 346.5 euros per MWh recorded on the 26th of last month.

According to Gas Infrastructure Europe analysis, the current storage rate of European gas reserves is 86%, which is slightly higher than the average of the past five years. This indicates that gas stockpiling is proceeding more smoothly than expected.

Germany is close to signing a gas supply contract with the United Arab Emirates (UAE). German Economy Minister Robert Habeck said that Chancellor Olaf Scholz is expected to sign an LNG supply contract with the UAE during his two-day Middle East tour. Scholz is scheduled to begin his Middle East visit on the 24th, visiting Saudi Arabia on the 24th, followed by the UAE and Qatar the next day, before returning home. Minister Habeck added that discussions on gas supply are also underway with African countries as well as the Middle East.

The European Union (EU) Commission's response is also a factor in the gas price decline. Since last month, the EU has implemented a plan to reduce gas consumption by 15%, and is currently discussing measures to reduce gas consumption during peak times.

The French government is pushing to limit electricity and gas price increases to 15% next year, and the UK is also preparing a large-scale energy support plan under new Prime Minister Liz Truss.

Timera Energy, a London-based investment advisory firm, released a report on the day analyzing that the European gas market conditions have improved over the past three weeks thanks to demand responses to price surges and policy measures by various countries. However, it noted, "As winter approaches, the European gas market remains very unstable."

There is also analysis that heating demand will gradually increase from next month, which could affect gas prices. Weather forecasts predict that temperatures at the end of this month will be lower than average.

This content was produced with the assistance of AI translation services.