Against the backdrop of a surplus of gas, gas prices fell sharply.

European countries have stockpiled more gas than they need due to a surge in LPG imports and unusually warm weather, causing gas prices to drop substantially . 

Bloomberg writes about it  .

Now gas prices are less than a third of their summer peak. At the same time, the publication stressed that there are still risks. Much depends on weather conditions, as a cold snap will quickly force Europe to start using accumulated reserves. In addition, European governments are concerned about the threat of new sabotage at energy facilities, which could change the situation on the market. 

Warm weather has helped curb demand for gas so far, but European policy makers are concerned that falling gas prices could lead to higher consumption as temperatures cool.

“Europe’s gas glut is expected to last until at least December. Europe is unlikely to see a prolonged cooling spell in November,” Giacomo Masato, lead analyst and senior meteorologist at Italian energy company Illumia, told the publication.

According to various estimates, gas demand in 2022 will fall by about 7-9%, “mainly due to the shutdown of large industrial consumers.” 

At the same time, according to Gas Infrastructure Europe, Europe’s efforts to increase reserves mean that European storage facilities are 93.6% full, and in Germany – 97.5%. And while these figures provide some comfort for the market, in Germany this will be enough to meet the demand for only two months of cold weather. In this regard, Europe will need to continue to attract cargoes of liquefied gas.

The publication noted that Europe continues to receive ships with gas. Thus, North-West Europe plans to receive 82 LNG tankers this month. This is 19% more than accepted in September.

Gas situation in Europe: details

The price of gas in Europe at the auction on October 24 fell below $1,000 per thousand cubic meters. At the same time, on August 25, the price reached a record high of $3.3 thousand per thousand cubic meters.

At the same time, several EU countries announced the need to set an upper price limit for natural gas used to generate electricity. The proposal and approval process for this initiative will take at least a few weeks.

Earlier, European Commissioner for Internal Market Thierry Breton noted that the European Union has become independent of natural gas supplies from the Russian Federation. According to Breton, the Russian Federation has ceased to be a reliable partner for Europe, as a result of which the EU has replaced 155 billion cubic meters of gas from other sources. 

(C)UNIAN 2022