Gas prices are falling in Europe
2022.12.19 07:05
Gas prices are falling in Europe
Budrigannews.com – As the European Union came to an agreement to cap prices after months of haggling, natural gas prices in Europe fell further at the opening on Monday to a new one-month low.
The front-month Dutch contract, which is used as a benchmark for northwest Europe, was down 3.9% at €110.91 a megawatt hour at 03:55 ET (08:55 GMT). On Friday, as details of the bloc’s most recent attempt to resolve a contentious issue surfaced, they fell 14%. Contracts with longer terms for the summer of 2023 were also down nearly 5%.
Following the bloc’s heads of government making it a priority at their summit meeting last week, EU Energy Ministers will meet in Brussels on Monday to discuss a proposal to cap the TTF if the price exceeds €188/MWh for three days.
The European Commission’s initial proposals, which established a ceiling of €275/MWh and allowed prices to remain above that level for two weeks before intervention, have a much shorter reaction timeframe than the new ones. Those proposals were criticized as extremely unlikely to be implemented because they were heavily influenced by concerns that suppliers would be discouraged from selling into Europe.
The new recommendations harmonize with the appearance of a first freight at a condensed flammable gas stockpiling and regasification office in northern Germany at the end of the week, one of about six such offices that Germany has tied down to expand its provisions of petroleum gas from Russia. Although Germany, Europe’s largest importer of gas, has made rapid progress expanding its import infrastructure, the location of the gas it will require next year to replace Russian supplies is still unknown.
The first significant dent in Europe’s gas reserves has been made by a week of cold weather, bringing overall storage levels down to 84.2% as of Saturday from over 88% a week earlier. Power generators have been forced to operate gas-fired power plants amid poor conditions for solar and wind generation, which has resulted in a much more pronounced decline in storage in the United Kingdom, from 95% to 68%.
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However, despite growing optimism that the continent will not require rationing this winter, the weather has not caused prices to rise.
