Before Christmas, specifically on December 21, according to data from the virtual trading node Title Transfer Facility (TTF) in the Netherlands, the price of gas climbed to a record above 180 euros per MWh. This is ten times more than at the beginning of the year. According to TTF data, on January 4, 2021, the price of gas reached only 18 euros per MWh.
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The pre-Christmas rise in prices was affected by a sharp drop in gas flows from Russia. The Jamal gas pipeline, which is to run supplies from east to west, has been operating upside down for eight days in a row.
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Nevertheless, from December 22, the price began to fall sharply again, with the fall continuing for the fifth day in a row. On Tuesday morning, the price of a gas futures contract delivered in January fell by more than eight percent compared to the previous day to 98 euros (2,450 CZK) per megawatt-hour (MWh), the Bloomberg agency warned.
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The drop in price is due to the fact that more ships with liquefied natural gas from the USA are now heading to Europe. This reinforces the expectation that new deliveries will help restore market balance.
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The number of ships sailing from the US to liquefied gas to European ports increased by a third over the weekend. Until now, tankers went mainly to Asia, where customers were willing to pay more for gas. But Asia’s biggest customers now use gas from stocks instead of buying more.
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Traders are also interested in whether Russia is willing to reserve additional pipeline capacity so that it can supply more gas to Europe next month. A morning report by the German gas network operator Gascade from the Mallnow measuring station near the Polish border showed that the gas flow was still stopped.
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In addition, the market is nervous about the weather forecast for the second week of January, when temperatures are expected to fall well below normal.
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Waiting for Nord Stream 2
According to Jiří Gavor, director of the Association of Independent Energy Suppliers, Russia’s cold relations with the European Union have long complicated the situation on the gas market. According to him, one of the main problems is the still unapproved Russian export gas pipeline Nord Stream 2, which the German regulatory authority refuses to grant a license to.
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“Russia’s relations with the EU are not good and this is unfortunately reflected in international trade. Let us therefore hope, at least for a milder winter, that the insufficiently prepared European storage tanks will last. Only then can a larger drop in prices be expected, together with the assumption that Nord Stream 2 will eventually receive a license, thus increasing deliveries, ”Gavor told Novinky.
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