The gas market is calming down somewhat after the extreme price peak of earlier this month. The European gas price remains at a high level. Compared to the same period last year, the TTF is more than three times higher. This has meanwhile also been achieved by European politicians who are keen to take action.
The natural gas quotation on the TTF futures market has remained reasonably stable. On Friday, March 11, the price stood at €131,23 per MWh, the highest closing price in the last seven days and a big difference from the closing price of €227,20 one week earlier. The price has fallen further in recent days and stood at €16 per MWh on Wednesday, March 105.
Traders are closely following the latest developments in Ukraine. There are signs that peace negotiations between the warring parties are getting closer. Zelensky seems to be less concerned about NATO membership and the Kremlin says that the Ukrainian president's package of demands is becoming more realistic. Gazprom's gas supplies to Europe (via Ukraine) continue. Approximately 95 million cubic meters of gas are supplied every day. This is in line with agreements with Europe, but according to Reuters it is 13% less than a week ago.
The Norwegian gas company Equinor reports that it is taking measures together with the government to supply additional gas to the European Union. Among other things, the permits to extract and export more gas have been expanded. Maintenance work is also being postponed in order to export more gas to the European Union and the United Kingdom for the time being.
Minimal stock
The European Union is working on measures to establish a minimum filling level of gas storage facilities at the start of the winter season. This should prevent problems such as those this winter. Government leaders agreed last week to reduce the heavy dependence on fossil fuels from Russia as quickly as possible. For example, significant investments are being made in additional LNG terminals and the construction of sustainable energy sources is being accelerated where possible.
However, these are all measures that cannot be implemented overnight. European leaders want to use the coming spring and summer to significantly build up the gas buffers. The current filling level of the storage facilities is 26%. The European Commission's idea is that the storage areas should be at least 1% full on October 90.
The plans have created a special situation on the gas futures market. The winter contracts are normally higher than the summer contracts, because there is more demand for gas in the winter. For large consumers, this price difference is an incentive to capture gas in the summer and store it for use later in the year. The increase in prices meant that there was no incentive and, certainly by the end of the summer, prices were so high that the prevailing thought was: it cannot rise much anymore. That turned out to be possible afterwards. Europe got away well last year due to the relatively mild winter, but we did get through the eye of the needle.