The decline continues. The price of European natural gas fell to its lowest level in nearly two years on Thursday. The TTF futures contract (Title Transfer Facility) Dutch, considered the benchmark for the European gas market, was evolving at 30.25 euros per megawatt hour (MWh), shortly after reaching 29.85 euros per MWh, a price not seen since June 2021.
Inventories “near record levels”
“The overall level of natural gas consumption continued to decline” with rising temperatures in Europe, explains analyst Bjarne Schieldro in a note. Heating demand remains the main source of gas consumption for individuals. Another explanation for this drop is storage levels, which are “close to record levels for this time of year”, according to the same expert.
Furthermore, Europe has, since the beginning of the war in Ukraine, greatly reduced its dependence on Russian gas. According to estimates by DNB analysts, Russia supplied around 40% of European gas imports before the war in Ukraine, compared to less than 10% currently.
Avoid the situation of summer 2022
The European Union last week launched its first international call for tenders for grouped gas purchases, in order to obtain better prices to replenish stocks before the winter of 2023-2024. Twenty-five suppliers have already responded to this call. These European “group purchases” should make it possible to avoid the situation of the summer of 2022, when States and companies rushed to the gas market at the same time to build up their stocks, fueling the surge in prices.
Since the start of the year, European natural gas has fallen by more than 60%, far from its historic record reached in March 2022 at 345 euros per megawatt hour, but still at high levels compared to previous years. In 2020, gas fluctuated around 15 euros per MWh.