As winter comes into its own in Europe, gas prices have fallen, with traders convinced full storage will take care of adequate supply during the coldest days.
At the start of this month, the benchmark gas price for Europe, the Dutch TTF facility, fell to the lowest since last August, the Financial Times reported, with traders expecting gas in storage to cover demand until spring and even beyond that.
"It wouldn't be such a bold statement to say the winter is over in the gas market because the storages are so full," one trader told the FT.
Natural gas was down 10% from the previous week and more than half the price it was this time last year when the benchmark traded at over 70 euros per megawatt-hour. It is, however, twice as high as the price of gas in Europe in January 2021.
Europe has been storing gas ambitiously, implementing things like joint buying and using storage capacity in Ukraine to make sure it has enough to last the winter as Russian pipeline flows remain much lower than pre-2022.
According to Gas Infrastructure Europe, as of the start of this week, gas storage in Europe was 83% full, which is a pretty adequate level for this time of the year. Yet, as European buyers filled up the gas caverns they also continued to buy LNG, so reliance on gas in storage is not a necessity for the winter months as supply from the U.S. remains robust.
At the same time, demand for gas has been slashed across most of Europe, mostly because of higher prices and government policies.
"Gas consumption has remained well below normal levels, which coupled with healthy LNG and pipeline supply, means storage reserves are way above normal for the time of year for a second year in a row," ICIS' head of gas analytics Tom Marzec-Manser told the FT.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More