The wholesale price of gas on the Rotterdam exchange, which is the market determinant for the European market, continues to fall. By Tuesday morning, the price had fallen below €120 per megawatt-hour (MWh). The next significant drop comes on the day the European Commission (EC) is due to announce another set of measures to combat expensive energy.
At around 11:00 CET on Tuesday, one MWh of gas at the critical Title Transfer Facility (TTF) virtual hub with a contract for November delivery cost 116 euros (2,850 CZK). Compared to the previous day, this represented a roughly nine percent drop.
The price has dropped by a quarter, or 26 percent, since last Tuesday. It has thus already reached the level of mid-June. Moreover, a similar development is also taking place on the spot (daily) market, where on Monday, one MWh was sold for only 61.5 euros (1,510 CZK).
On September 28, natural gas started to become significantly cheaper. The price reached a record high at the end of August when it reached almost EUR 345 (CZK 8,480).
A year ago, the price was only around EUR 40 (CZK 980) per MWh. The price was pushed up mainly by the war in Ukraine and the related limited supplies from Russia.
The fact that Europe has been able to fill up its storage facilities has been behind the cheapening of gas in recent weeks.
According to Reuters, the European Union’s current capacity is 92 percent. The situation has also been helped by recent favorable weather, which has allowed savings on consumption.
The European Commission will announce new measures
Tuesday’s sharp drop is likely to have been partly influenced by the European Commission, which will publish new proposals this afternoon for measures to combat the energy crisis affecting households and businesses across the European Union.
According to unofficial plans leaked to the media, the EU executive will propose a mechanism that would temporarily and, under certain conditions, allow the creation of a so-called dynamic price cap on the TTF virtual trading hub.
The TTF is the European hub for gas trade and acts as a reference point for EU prices, which the Commission said would help prevent extreme price fluctuations and speculation.
The measure is transitional until the EU launches an alternative pricing mechanism for liquefied natural gas (LNG).
The EC says LNG accounts for a larger share of gas consumed in the EU in case of a supply shortfall from Russia, which the EC says is not reflected in the current system. The preliminary proposal foresees the launch of a new price index by the next gas filling season.