The price of gas continues to fall, now to levels not seen since the end of 2021, and European stocks are full. But is there a risk that this will become a problem in the spring?
The gas price continues to fall. Indeed, to collapse. So much so that the values are now similar to those of the end of 2021, before the Russian invasion of Ukraine and the very beginning of the energy crisis. And even the cold, which has recently arrived in Europe, is not enough to bring gas prices back up.
The cutting of Russian supplies does not seem to be a problem anymore and the forecasts for the future are also optimistic, so much so that there is who thinks that by now the price could remain below 60 euros per megawatt hour throughout the year.
The scenario is very different from what was envisaged just a month ago, when some analysts feared a price of 140 dollars until the spring of 2024. Things are going differently, but as recent forecasts also demonstrate, it takes very little to completely change course. The energy crisis cannot be considered behind us and one of the next challenges, for the whole EU, concerns storage: let’s see why.
The price of gas continues to fall
The price of gas continues to fall and operators say they are optimistic for the rest of the winter, also thanks to the less rigid temperatures and the increase in LNG flows in Europe. Prices continue to drop gradually: today they reached 51.4 euro per megawatt-hour and then climbed back to around 54. The drop, since the beginning of the year and therefore in a few days, is as much as 32%.
Gas, the end of winter and the risk of rationing
Despite the good news, it seems early to be able to say that the energy crisis is over. For now, the winter has gone better than expected, with rationing effectively excluded. Not even a collapse of temperatures, however expected in these days, seems to worry for a forced reduction in consumption, which is unlikely to happen. Furthermore, there is also the wide availability of LNG for Europe, with China which at the moment does not seem willing to compete.
Storage: what will happen to gas stocks
The drop in gas prices also depends on the lower consumption during the first weeks of winter and the consequent greater filling of the storage facilities. European deposits are almost 82% full, much more than has usually happened in this same period in recent years, when the figure was normally between 60% and 65%.
Just the stocks, as Il Sole 24 Ore explains, are a decisive element for understanding the dynamics, including those of price. Just the rush to stocking of warehouses, in recent months, has pushed prices upwards, even reaching the record level of 340 euros per megawatt hour in August. In that case the demand for gas was very high to fill at least 90% of storage throughout Europe.
So far, however, those stocks have hardly been used at all. For various reasons: the mild climate, the availability of LNG and also the reduction in consumption. Selling that gas now, overpaid in the summer, is not worth it. But what will happen in spring? When the heating is switched off, there may even be an excess of gas, with stocks higher than expected.
Also for this reason, the market is now reacting in this way: the collapse in prices also depends on the attempt to realign supply and demand. Perhaps also in the hope of soliciting an increase in consumption or of reselling LNG in Asia. The markets, therefore, would push to reduce inventories, but it does not seem that this will happen. And it will therefore be necessary to understand what effect such full stocks can have on the price of gas in the spring.
Original article published on Money.it Italy 2023-01-17 15:23:04. Original title: Crolla il prezzo del gas, ma gli stoccaggi pieni possono essere un problema: quali rischi in primavera?
