Status: 09/26/2022 1:56 p.m
Gas prices continue to plummet – the price has fallen by up to eight percent today. Declining demand, higher delivery volumes from the USA and well-stocked storage facilities are reducing the price pressure.
European natural gas became significantly cheaper today, continuing the trend of the past few days. In the morning, the price of the TTF futures contract for Dutch natural gas fell at times by more than eight percent to less than 170 euros per megawatt hour. On Friday it was still around $188. The TTF contract serves as a guideline for the European price level. In August, the price jumped to a record high of more than 300 euros per megawatt hour.
According to experts, natural gas buyers can hope for a continuation of this trend in the coming months. “We will certainly see a drop in prices over the next 18 months,” said Timm Kehler, Managing Director of the “Zukunft Gas” association. However, despite the current decline, prices are at a historically high level – in spring 2021 one megawatt hour of gas cost less than 20 euros.
Good filled memory
The reason for the fall in prices is, among other things, well-stocked storage facilities in Europe. The states had recently managed to fill up their reserves quickly. In October, the gas deposits in some states could already reach their capacity limit. The storage level in Germany was recently over 90 percent.
In addition, there are record-high imports of liquefied natural gas (LNG) from the United States and falling demand due to the persistently high price level, explain the analysts at EnergyScan, the data provider for the utility Engie. As a result, fears of supply bottlenecks in winter have diminished somewhat. They came up because Russia practically no longer pumps gas to Germany. By 2030, the USA could become the largest gas supplier in the EU and provide up to 90 percent of the volume that Russia supplied in 2021, according to a study by experts from the Energy Economics Institute at the University of Cologne (EWI).
Agreement with United Arab Emirates
Federal Chancellor Olaf Scholz also traveled to the Gulf region at the weekend to expand cooperation on energy supply. In the United Arab Emirates, the energy company RWE signed a contract for the first delivery of liquid gas on Sunday. An agreement was also signed for multi-year deliveries from 2023.
However, according to the EWI study, the decisive factor in price development is consumption. “If EU gas demand were to fall by 20 percent by 2030 compared to 2021, wholesale prices could return to 2018 levels – regardless of whether gas trade with Russia is restricted or not.”
Fears of a recession are also considered a price damper. “The massive increase in electricity and gas prices is making the production of some goods unprofitable, so that companies are shutting down despite sufficient orders,” explained Commerzbank analyst Christoph Weil.