The essentials Mild temperatures and energy sobriety are having a major impact on gas prices in Europe, which have fallen back to pre-war levels in Ukraine.
Gas prices have been in a clear downward trend for a week, notes Le Parisien. On Wednesday, the price of MWh of gas, the TTF (European market reference price), even fell back to its pre-war level in Ukraine, below EUR 80 per MWh. Note, however, that prices on international markets are still almost three times what they were in summer 2021.
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A significant drop in consumption
Mild temperatures and economical energy policies have a significant impact on gas consumption. In France, for example, it has fallen 10.8% since August 1, according to gas transmission grid operator GRTgaz’s weekly dashboard. This decline, which “affects all categories of consumers, residential, service and industrial (…), reflects a change in consumer behavior”, believes the operator.
Reserves at the highest level
Many countries are taking advantage of the low prices to stock up now rather than waiting for spring or summer. Result: Reserves in Europe are now at an exceptional level of over 83%, ie 30% more than the same year last year and 10% more than the average for the last five years.
uncertainties remain
While this decline is good news for European corporate and individual portfolios, vigilance is warranted. In addition to a freeze on supplies from Russia, Beijing’s demand for LNG could pick up again in 2023 due to a recovery in the Chinese economy, which would make it more expensive. Warm temperatures in Europe should also no longer occur, which would consume further supplies. “The European Union will have to continue its efforts to further reduce its demand to avoid running out of gas in the winter of 2023/24,” the International Energy Agency (IEA) warned in a report on Monday. It said the gap between supply and demand “could reach 27 billion cubic meters in 2023.”
security measures in Europe
European Union member states have approved a temporary mechanism to cap wholesale gas prices above a certain threshold. This system, which will come into effect on February 15 for at least a year, must therefore block any price increases that would ultimately affect businesses and consumers.