Posted Jan 2, 2023 12:09 p.m.Updated Jan 2, 2023 1:29 p.m
It’s a reassuring trend. This Monday, the wholesale price of natural gas in Europe fell to its lowest level since the start of the war in Ukraine, compounding the decline seen in recent weeks. On the Rotterdam TTF, the leading index on the European market, the megawatt hour (MWh) for delivery in February fell further by 4.67% to EUR 72.75. This is the lowest price since February 21, a few days before the Russian offensive.
The megawatt hour is currently trading at a level far removed from the highs of last summer: in August 2022 it reached its high of 342 euros. An upward move that began in the fall of 2021 before accelerating following the Feb. 24 invasion of Ukraine. Since then, the gas pipelines between Russia and Europe have almost all been closed.
A mild winter and high stocks
On the price side, however, the trend is downward, thanks to the large gas reserves that have been built up in Europe with the massive use of liquefied natural gas (LNG). In addition, there is more moderate demand due to favorable weather conditions. In France, according to GRTgaz, consumption has decreased since August 1 compared to the same period in 2018, both among manufacturers (-22.1%) and on public distribution networks (-14%), which mainly feed private individuals .
But be careful: the drop in gas prices is not synonymous with a quick return to normalcy. In fact, wholesale prices do not directly affect the consumer’s final bill. In addition, even if the trend is downward, prices on the international markets remain almost three times higher than in the summer of 2021. And above all, the pressure on European gas supplies remains strong in the coming months, which Europe still wants to compensate with parades the fall in Russian imports.
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