European Gas Prices Drop Below 100 Euros for the First Time Since June... Thanks to Stockpiling and Weather

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] European natural gas futures prices fell below 100 euros per megawatt-hour (MWh) for the first time since Russia cut off gas supplies, according to major foreign media reports on the 24th (local time).

Gas prices are dropping thanks to Europe's nearly full gas storage facilities and warm winter weather. If the troubled gas price cap is agreed upon, gas prices are expected to fall further.

On this day, natural gas futures prices at the Netherlands TTF exchange fell nearly 20% intraday, dropping to 93.35 euros per MWh. This marked the lowest level since mid-June.

Considering that European gas prices have traded between 20 and 40 euros over the past decade, gas prices are still expensive. However, compared to the intraday price exceeding 300 euros per MWh in August, prices have fallen by nearly 70%, indicating a recovery from the worst situation.

UK gas futures prices also fell as much as 15% intraday, dropping to 1.72 pounds per therm (the British heat unit).

According to the think tank Bruegel, European natural gas consumption this winter is about 7% lower than the 2019?2021 average. The European Union (EU) has voluntarily agreed to reduce gas demand by 15% this winter and is implementing various gas-saving measures.

With increased imports of liquefied natural gas (LNG) to replace Russian gas, European gas storage facilities have been filled to over 90% of capacity. Analysts suggest that there is little room left for additional storage, so even if gas is supplied now, it must be sold on the spot market.

However, doubts remain about whether the currently stored gas will be sufficient if the warm weather turns cold. Concerns persist that extreme measures such as rationing may be necessary if the situation worsens.

There are also concerns that next winter will be more severe than this year. This year, Russia supplied gas at least during the first half, allowing more leeway in filling gas storage facilities.

The relatively high futures prices for gas deliveries next year reflect these anxieties. Futures prices for gas deliveries in the first quarter of next year fell only 6% on this day, recording 142 euros per MWh.

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