European gas prices plunge to lowest since June

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European natural gas prices fell below 100 euros per megawatt hour (MWh) for the first time since Russia cut exports in the summer in response to EU sanctions over its invasion of Ukraine.

Futures for Dutch TTF gas, the benchmark European contract, fell to 93.35 euros per MWh on Monday, the lowest level since mid-June.

The price represents a drop of almost 20 percent from Friday’s prices and 70 percent below the prices recorded in August, when they exceeded 300 EUR/MWh.

Concerns about potential gas shortages during the winter eased with mild temperatures and gas storage capacity reaching over 90%, helped by deliveries via Russian pipelines.

The Nord Stream 1 pipeline, one of the main pipelines from Russia to Europe, has been shut down indefinitely due to alleged sabotage. Russian gas now accounts for just 9 percent of EU supplies, compared with 40 percent last year.

An image from an intelligence report depicting a gas leak from the Nord Stream 1 gas pipeline near Sweden.

Prices are also falling as more LNG “floating storage” appears. It was reported over the weekend that dozens of LNG carriers were unable to dock in Spain due to a lack of offloading facilities.

Commenting on the price drop, James Waddell of Energy Aspects said that in the short term, prices were falling due to “limited remaining storage capacity, weak gas demand due to mild weather and congestion in LNG (liquefied natural gas) delivery and transportation. east within Europe.

Despite this increase in gas supplies, the lower price is still much higher than the €20 to €40/MWh range that natural gas has been mostly traded in over the past 10 years.

In any case, falling prices will provide an incentive for EU leaders who are working to cap natural gas prices amid rising inflation and sluggish economies in their countries.

Last week, the leaders of EU member states met in Brussels, where they struggled to find immediate solutions on how to deal with the energy crisis.

“There is a lot of work ahead,” Belgian Prime Minister Alexandre De Croo said. “We’re entering uncharted territory where we don’t have experience yet.”

After one-day talks on Thursday, the 27 EU leaders agreed to continue working in the coming weeks on ways to impose a cap on gas prices in the event of future price spikes.

Russian President Vladimir Putin said last week that Moscow was ready to resume gas supplies to Europe via the Nord Stream 2 gas pipeline.

Speaking at the Moscow Energy Forum, he said European countries must decide whether they want to resume supplies.

Putin said: “Russia is ready to start such deliveries. The ball is on the side of the EU. If they want, they can just turn on the faucet.”

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