Europe has started the new year with warm weather, making Berlin the warmest start to the year on record. Such a climate may have disappointed snow lovers, but it has delighted European businesses and national governments. Due to reduced demand on the Dutch Futures Exchange, the price of TTF gas is declining on a daily basis.
On the TTF exchange, gas cost 73 euro/MWh on Monday, 72 euro/MWh on Tuesday, and dropped by almost 5 percent on Wednesday. – 15:00 In Lithuanian time, it cost 69 euros per megawatt hour. The lowest price recorded on Wednesday afternoon was 68.6 euros per MWh.
This is 50 percent. prices lower than a month ago and the lowest since February 21, a few days before the start of the war.
Gas reached its price peak last August, when a megawatt hour cost 343 euros, so now gas costs almost 5 times less.
“Until forecasts show wintry weather, prices are likely to continue declining,” analysts at trading company Energi Danmark A/S told Bloomberg.
Falling gas prices have reduced heating demand and countries’ concerns that gas reserves will run out too quickly, and prices have been pushed down not only by warmer weather but also by abundant energy generation wind power in Europe in the last few days.
The economist Marius Dubnikovas 15 minutes he said that the downward trend in gas prices is more than evident. In the last month, gas has become 50% cheaper.
Partner photo/Marius Dubnikovas
“This trend started at the end of August, when the sharp price increase turned into a decrease. At the beginning of September, I expressed the opinion that energy prices should be cheaper. It seems that this has been confirmed and that the trend of falling prices has formed,” said M. Dubnikovas.
The economist thought air temperatures could be higher in January and February, which could also boost gas prices, but he doesn’t expect a significant increase.
“As spring approaches, even lower prices can be seen. The energy crisis as such is a problem of the past year. This year we will probably talk about the opposite: how much energy is cheaper than last year” , thinks M. Dubnikovas.
Businesses will pause, conditions for reducing prices will appear
Electricity prices also depend on gas prices, and cheap energy is a huge boon that affects both human life and business, says M. Dubnikovas.
“Next time we review (the audience 15 minutes) gas and electricity prices, it will be possible to reduce them significantly: there will no longer be the growth that we saw on the first day of January. This is also a huge incentive for businesses, because last year the biggest fear was that with high energy prices some businesses might not survive,” said M. Dubnikovas.
With the price of gas, those companies that have been forced to reduce capacity or cease operations altogether due to the jump in energy prices will be able to breathe easier.
“This also applies to a factory like Achema, for which gas is the main raw material,” the interviewer pointed out.
The economist hopes that in the future, the decrease in energy costs will create the conditions for the decrease in food prices in the country.
Erik Ovcharenko/SNB/Achema
“Not immediately, because price fluctuations on the stock exchange do not directly affect the prices of the goods already on the shelf. However, if energy prices remain at a lower level or even decline, after four to six months we can see a decrease in food prices as well”, believes M. Dubnikovas.
According to Bloomberg, gas prices have nearly halved since 2022. On average, that’s good news for both policymakers and consumers, who have struggled with rising bills over the past year, as well as banks. central banks, which were forced to raise interest rates to curb inflation.
Gas storage facilities in Europe were filled to an average of 83.5% on January 2, significantly exceeding the seasonal average for the past five years (70%), writes the SNB.
On December 19, European Union members agreed to cap natural gas prices in the Community. The related document indicates that the price “ceiling” procedure, which will be effective from 15 February, would be applied in case the gas price for the following month on the Dutch TTF exchange exceeds the limit of 180 euros per MWh for three consecutive working days, and the price of LNG in the same period is 35 euros higher than the average price in other international markets.
