On Wednesday, the 4th of January, the price of natural gas at the Dutch Title Transfer Facility (TTF) dropped to the level observed before the start of Russia’s invasion of Ukraine – slightly below 70 EUR/MWh for future contracts.
Shortly before Russia’s invasion of Ukraine at the end of February, the price of natural gas was approximately 88 EUR/MWh. In August, when Russia cut supplies of gas to Europe by a significant margin, the price was above 340 EUR/MWh. On the 1st of December 2022 the price was at 140 EUR/MWh.
Analysts say that the gas price drop was facilitated by air temperature, which is higher than the norm, use of gas in facilities and replacement of Russian gas with supplies from other regions of the world.
«We now have a well-supplied E.U. gas market, even without Russian gas,»
said Eurasia Group Director of Energy, Climate and Resources Hennings Gloisstein in an interview to New York Times. «That’s reflected in current prices.»
Following the start of the war in Ukraine, Europe rushed to sign gas supply contracts with US, Qatar and other exporting countries. Europe also put effort into building terminals in order to receive liquefied natural gas.
As previously reported, Germany’s new terminal in Wilhelmshaven received the first tanker loaded with liquefied natural gas from US.
Netherlands has also opened a new terminal of its own in Eemshaven. At the same time, European businesses and private consumers have successfully reduced gas consumption by approximately 20% in response to high prices and recommendations from their governments.
These major changes apply to supplies and demand, and this means gas storage facilities that were almost fully filled in autumn still have a large volume of natural gas. At the beginning of January the volume of gas in EU countries was equal to 84% of the maximum capacity (52% in 2021).
Sufficient gas stores to help satisfy high demand in winter is often the decisive factor for gas prices. Analysts explain that Europe may conclude winter with a sufficiently high gas storage level to make sure a large procurement of gas, as observed in autumn in 2021, unnecessary.
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