Gas prices in Europe fell below $750 for the first time since February 2022. The exchange price of gas at the opening of trading fell below $750 per 1,000 cubic meters.
Gas quotes are falling due to lower consumption as well as warm weather in several regions of the world. In particular, we see temperatures exceeding seasonal norms for much of Europe and the US. Warming is also observed in China, the world’s largest gas importer, and Japan.
It has been around 15 degrees Celsius in Berlin since the beginning of 2023, despite the fact that the average temperature here at this time of the year is usually close to zero. In Paris and Zurich, the temperature in January reached 18 degrees Celsius. The region manages to avoid a crisis scenario thanks to stable warm weather.
Analysts believe that a major gas shortage is still unlikely. In addition to warm weather, the load on Europe’s energy systems is reduced by wind. Nearly record-breaking wind power was produced in Germany on Wednesday, reducing the need for gas for power generation. The good preparation of the EU for the winter season also contributes to the reduction in gas prices.
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Earlier this month, the EU officially introduced a gas price ceiling of 180 euros per megawatt-hour (about $2,000 per 1,000 cubic meters). The restrictions will come into force in February and will last for a year.
Norway has become Europe’s largest gas supplier after sanctions were imposed on Russia over the war in Ukraine. The Norwegian government said on January 5 that this year’s supply volumes will change little from 2022, when the country exported 122 billion cubic meters of gas. Equinor said gas production is likely to remain flat for the next four to five years.
Gas storage facilities in Europe were 83.52% full as of January 2, according to Gas Infrastructure Europe, well above the five-year seasonal rate of 70%. With falling demand for electricity, gas reserves are not being used up as quickly as previously expected. In the last weeks of January, Germany even managed to pump more gas into storage facilities than it took out.