The price shock on the gas market is over. Even conflicts like those in the Red Sea are not causing an increase in prices for the time being. There are two main reasons.
The price of European natural gas has fallen to its lowest level in over six months. The landmark futures contract TTF for delivery in one month on the Amsterdam stock exchange slipped below 26 euros per megawatt hour. In the morning the contract cost 25.82 euros, making it cheaper than it has been since July.
The war in the Middle East caused the price to rise above 50 euros in October. Then a trend reversal began in November. Since the beginning of the year, the price of the raw material has fallen by around 20 percent. On the market, the decline is explained, among other things, by the rather weak economy in the EU. This is also slowing down gas demand in Germany.
Supply in Europe is not at risk
According to the latest information from the Federal Network Agency in January, Germany saved a lot of gas at the end of 2023. Accordingly, gas consumption in industry in the months October to December was 16 percent below the average consumption from 2018 to 2021. Consumption by households and businesses was 16.7 percent lower. The network agency points to the temperatures: In 2023, these were above the average for the years 2018 to 2022, which had a major impact on consumption.
The overall level of natural gas storage facilities in Germany has fallen continuously since the beginning of the year. However, it is still comparatively high for the time of year. On Saturday, the overall level was 72.59 percent, according to data from the European gas storage association GIE.
Even the attacks by Houthi rebels on ships in the Red Sea have recently failed to give the gas price a major boost. Raw materials experts assume that this will not affect supplies in Europe.
The price level is also well below the highs reached during the Russian war against Ukraine. Over the course of 2022, more than 300 euros per megawatt hour were due at times after Russia severely cut back on its gas deliveries to Europe.
Source: Stern
