Status: 10/24/2022 10:26 am
Filled reservoirs, mild temperatures and the measures planned at EU level are causing the price of European natural gas to collapse today. In the morning it temporarily fell to its lowest level since June.
The downward trend in the gas price continues: In early trading, the futures contract TTF for Dutch natural gas, which is considered to point the way, at times cost 100 euros per megawatt hour (MWh). That was a slump of more than 13 percent from Friday. As a result, the TTF contract, which is used as an indicator for the general price level on the European natural gas market, fell to its lowest level since June. In the morning it was trading slightly higher again at 104 euros per MWh.
EU storage almost 93 percent full
The TTF price has been falling noticeably for a few weeks now. At the end of September it was still €223 per MWh. In August, the price even jumped to a record high of 342 euros. At that time, a stop in the supply of natural gas from Russia triggered a rapid rise in the price of natural gas. Experts justify the somewhat more relaxed situation on the gas market, among other things, with the well-filled storage facilities.
According to the European storage companies, the natural gas storage facilities in Germany, which recently saved less gas than other countries in a European comparison, were 96.52 percent full last Wednesday. The filling level of 95 percent prescribed by a federal regulation for November 1 has now been exceeded. According to the information, the gas storage facilities in the entire EU were 92.92 percent full. The storage facilities compensate for fluctuations in gas consumption and thus form a kind of buffer system for the gas market.
In addition, reference was made to the comparatively mild temperatures for the time of year and to the efforts to reduce gas consumption and a price brake. In the EU, the countries are currently working on a package of measures that the EU Commission recently proposed. These include mandatory joint gas purchases and a kind of price cap for the European gas exchange TTF.
Start of delivery of LNG and oversupply in Spain
In addition, the prospect of the start of deliveries of liquefied gas has dampened concerns about insufficient supply in the winter months, according to the market. Germany currently receives gas via pipelines from Norway, Belgium, the Netherlands and France. At the turn of the year, three terminals for landing liquefied natural gas (LNG) are to be put into operation on the German North Sea and Baltic Sea coasts.
An oversupply in Spain is also having a dampening effect on the price of European natural gas. There, the landing terminals for LNG are fully utilized and more LNG tankers from overseas arrive at Spanish ports than can be unloaded at the moment.
Despite the current relaxation, the price of European natural gas is still at a comparatively high level. In 2020, the TTF futures contract was still below the EUR 20 mark.