At the end of a turbulent year, the price of gas in Europe appears to have returned to the level of early January 2022. Today the price of fuel fell for the seventh consecutive day due to unusually mild winter weather in much of Europe. Due to warmer weather, gas consumption for heating is decreasing and gas supplies are being maintained. Plus, the industry traditionally uses less gas around the holidays.
LOOK. Money expert Paul D’Hoore discusses the price of European gas
On the main Amsterdam gas exchange, the price fell 1.6% on Tuesday morning to 81.68 euros per megawatt hour of gas. Last week, gas prices already fell by almost 30%. The price has therefore almost returned to the level of the beginning of 2022, when around 80 euros per megawatt hour had to be paid. The price is therefore well below the peaks of around 350 euros reached at the end of August. Despite the decline, gas is still much more expensive than in recent years, when it cost less than 30 euros per megawatt hour.
The price of gas, which had already started to rise sharply since October 2021 due to Russia’s lower deliveries to Europe, has shown significant fluctuations this year. After a decline in December last year, the price of gas rose in February due to the Russian invasion of Ukraine. Threats of sanctions from the West against Moscow and threats from Russia to cut off gas supplies rattled the market.
More stable spring
In the following months, the gas price seemed to stabilize somewhat due to warm spring weather and because Russia’s state-owned gas group Gazprom continued to supply gas to Europe. Since mid-June, however, gas prices have risen again. This came as Gazprom warned that technical problems could cut supplies through a key pipeline to Germany by 40%.
Gas price spikes
Since then, Gazprom has been supplying less and less gas to various European countries and the Russian gas tap has been almost completely closed. Europe then accused Moscow of using gas supplies as a weapon. In the summer months, the price of gas rose steadily to a peak of around 350 euros per megawatt hour in August. This was due to concerns that European countries would not be able to replenish their gas supplies in time for the winter due to the loss of Russian supplies.
To address the shortage of natural gas, more and more European countries have started importing liquefied natural gas (LNG). Also for this reason and thanks to the mild autumn climate, Europe has managed to fill the gas deposits. Gas prices could also fall further as mild winter weather is expected to last into the first week of January.
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