European natural gas futures fell to a nearly two-month low, Bloomberg reported on the 19th (local time). Analysts say the European gas market is stabilizing somewhat as Europe’s efforts to secure alternative resources for Russian gas progressed more smoothly than expected.
The price of natural gas futures on the Dutch TTF exchange fell 6.5% from the previous trading day to 175.5 euros per megawatt hour (MWh). It fell to half of the 346.5 euros per MWh on the 26th of last month.
Gas Infrastructure Europe’s analysis shows that the current stockpile of gas reserves in Europe is 86%, slightly higher than the average for the past five years. In other words, gas inventory is being secured more smoothly than expected.
Germany is about to sign a gas supply contract with the United Arab Emirates (UAE). German Economy Minister Robert Habeck said on the same day that Prime Minister Olaf Scholz is likely to sign an LNG supply contract with the UAE during his two-day trip to the Middle East. Prime Minister Scholz will travel to the Middle East from the 24th. He is scheduled to visit Saudi Arabia on the 24th and return home the next day after visiting the UAE and Qatar one after another. Harbeck added that he is discussing gas supply with African countries as well as the Middle East.
The response of the European Commission is also a factor in the decline in gas prices. The EU began implementing a 15% reduction in gas consumption last month and is currently discussing ways to reduce gas consumption during peak times.
The French government is pushing to limit the rate of increase in power and gas costs to 15% next year, and the UK is also preparing a large-scale energy support plan.
Timera Energy, a London-based investment advisory firm, released a report on the same day and analyzed that conditions in the European gas market have improved over the past three weeks thanks to demand and policy responses from countries. However, he diagnosed, “As winter is approaching, the European gas market is still very unstable.”
Some analysts say that demand for heating will gradually increase from next month, which could affect gas prices. According to the weather forecast, the temperature is expected to be lower than usual at the end of this month.