The first half of the current heating season in Europe is mirroring the previous one. Gas prices are falling. Experts advise not to draw conclusions yet.
From October to the end of November, the weather was warm in Europe, after which a cold snap came to the EU countries, which lasted a week and a half and then receded. As a result, the first half of the heating season in the European Union is very similar to October-December 2022, when gas consumption was below expectations and fuel prices went down.
This heating season, the cooling lasted 11 days, and last year it lasted 15. At the same time, gas withdrawal from storage during these periods is completely identical – 7.1 billion cubic meters, according to GIE. The volumes of selected reserves from the beginning of the season to December 11 are also similar – 8 billion in 2022 and 10 billion in 2023.
This year turned out to be the warmest in history, and if a warm winter repeats, then 60-65 billion cubic meters of gas may remain in EU storage facilities. UGS facilities will remain 60% full, which will be a new record.
Under pressure from stocks and warm weather, gas prices on European exchanges continued to decline and today supplies for January from the TTF hub were already trading at $400 per thousand cubic meters. Whereas in mid-October they reached $652 per thousand cubic meters.
A similar situation occurred last year, when by the end of December quotes dropped to $900. In the middle of the month they were $1,500.
Gas prices are not being strengthened by events on the other side of the Atlantic. Record gas production, ample reserves and forecasts for a warm winter have led to lower fuel prices in the United States. They dropped to $82 per thousand cubic meters on the Henry Hub exchange. Under the traditional pricing formula for US LNG, the fuel cost for traders could now be $200 before shipping. On the TTF, LNG for Northwest Europe is trading at $386.
Of course, these are not record quotes from last year, but for Gazprom, current gas prices in Europe are still profitable, since they are higher than pre-crisis prices. Sometimes – twice.
Deputy Director of the National Energy Security Fund (NESF) Alexey Grivach notes that it is too early to predict a repeat of the last mild winter in Europe.
“So far the weather in Europe is quite mild and windy. Therefore, in a month they took about 10 billion cubic meters from UGS facilities in the EU during the month of the heating season. But we see that everything can change dramatically. Real winter has already arrived in the European part of Russia, which has led to the establishment of a new daily record for gas extraction in the UGSS zone. And no one can guarantee that cold and calm will not come to Europe. There are still more than 100 days of the heating season ahead,” says the deputy director of the FNEB. He adds that 2 billion cubic meters have already been taken from Ukrainian underground gas storage facilities – almost a fifth of all reserves: “Some of them belong to European traders and were exported to the EU.”
2023-12-13 16:37:00
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