Europe's Energy Crisis Ends... Gas Prices Cheaper Than Before Ukraine War

Energy Storage Levels Usually Exceeding
Will It Accelerate the Gradual Economic Recovery?

[Asia Economy Reporter Eunha Kim] European natural gas prices have fallen to their lowest level in about 18 months, now cheaper than before Russia's invasion of Ukraine, CNN reported on the 17th (local time). Expectations for the European economy, which had shown a gradual recovery since the beginning of the year, have increased.

[Image source=AP Yonhap News]

According to the independent commodity information service ICIS, a global commodity market analysis firm, Germany's benchmark wholesale gas price fell about 5% that day, reaching 49 euros (approximately 68,000 won) per megawatt-hour (MWh). This is the lowest level since September 2021 and represents an 84% drop compared to the peak price of 320 euros (approximately 445,000 won) in August last year.

Europe has depended on Russia for 35% of its gas supply. Russia attempted to weaponize energy by leveraging the severe winter cold, but the strategy failed due to milder-than-average winter weather in Europe. Moreover, European countries actively sought alternatives to Russian natural gas. Europe has been striving to diversify its natural gas supply sources by cooperating with countries like Norway and rapidly constructing liquefied natural gas (LNG) terminals.

The Financial Times (FT) reported, "With only six weeks left of winter, Europe's natural gas storage levels are about 65%, significantly above the usual levels for this time of year."

Henning Gloysteiner, Director of Energy and Climate at the global consulting firm Eurasia Group, analyzed, "It appears that Europe has successfully freed itself from Russian gas. Although current prices are still relatively higher than the pre-war average, they do not reflect the energy crisis risk level seen last year."

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