Gas prices fall for fourth week as energy crisis eases
2021 Spiked In Early Than In Over Times Mwh Per Late Higher Prices, The Three Price Which Around August, Are €21 Still Per At Mwh €343
European wholesale gas prices posted a fourth consecutive weekly loss with mild weather helping to ease the continent’s energy crisis.
Prices for delivery fell almost 5% to around €69 per megawatt hour (MWh), posting a fall of over 9%. The UK equivalent also declined.
Energy costs have been a key driver of inflation, and unexpectedly low demand is easing the burden on consumers and sparking optimism among European authorities.
After record prices last year and fears that governments would have to resort to rationing, the mild winter is helping the region keep inventories at healthy levels.
Still, risks remain.
Prices, which spiked at around €343 per MWh in late August, are still more than three times higher than the €21 per MWh price in early 2021.
Europe is exposed to any further supply disruptions, with the global markets fundamentally short of gas this year amid lower flows from Russia. Supplies of liquefied natural gas will be limited, with no new major export projects starting in the near term.
“The fundamentals haven’t changed,” said Graham Freedman, an analyst at consultancy Wood Mackenzie.
European stockpiles are 83% full — above the five-year seasonal norm for this time of year — with some countries even sending gas into storage in recent days. In Germany, the region’s largest economy, that level is about 91%, according to Gas Infrastructure Europe.
“We are very optimistic, which we weren’t really back in the fall,” Klaus Mueller, president of Germany’s network regulator, said, adding that a gas shortage this winter is unlikely.
Even with a cold snap at the beginning of December, pan-European demand was 11% below the five-year average last month, ICIS data show. Global fertiliser prices are falling after hitting records in 2022 as gas costs and farmer demand both decline.
However, European Central Bank chief economist Philip Lane said price pressures in the euro area will remain elevated, even if surging energy costs are starting to ease.
“This is not conclusive for the overall inflation dynamic,” Mr Lane told a panel discussion in New Orleans.
- Bloomberg. Additional reporting, 'Irish Examiner'