The trend of falling gas prices has reversed today. After two weeks, the TTF is taking another step up today. Uncertainty about supplies from Russia and the threat of government intervention create a special situation on the gas market.
The natural gas quotation on the TTF futures market has shown a correction. The price has been on a steady decline for the past two weeks. It stopped yesterday (April 12) at €100,14 per MWh. At the time of writing this article, the quotation is at €105,67 per MWh. The decline in the price of gas is attributed to the smooth supply of LNG and the milder weather. Compared to the peak in March, the gas price has lost 70%. Yet the market remains tense because of the war. Gazprom reports that orders have fallen to 68% of what can be delivered under current transport contracts.
A striking phenomenon is also visible on the futures market. The prices for the contracts for next summer are higher than the contracts for the winter. The contract for July 2022 is the highest, at €102,89 per MWh. The price for March 2023 is €94,73 per MWh. Stockpiling is thus discouraged by the market. The fact that the contracts for the summer period are so high is said to be due to the requirements for a minimum fill level at the beginning of the winter. National governments and at European level want to avoid a repetition of the scenario as last winter. A tight supply was one of the reasons that the price rose so explosively, in addition to geopolitical developments.
Power of Russia
Dependence on Russian gas remains a concern. Today, leading German economic institutions (RWI Essen, DIW Berlin, Ifo Munich, Ifw Kiel and IWH Halle) confirmed that Germany will be plunged into recession if gas supplies from Russia are stopped immediately. Stopping deliveries immediately has always been seen as unlikely, but since the war this has become a real danger. High gas and energy prices are already lowering economic growth expectations in the largest economies within the European Union.
In order to become less dependent on Russia, European countries are also looking for other suppliers. One of the countries that may be added to this list is Egypt. Italian energy company Eni has signed a framework agreement with the Egyptian Natural Gas Holding Company, the Egyptian government announced. In addition, this agreement also offers opportunities for exploration in Egypt, especially in the Nile Delta, the eastern Mediterranean and the western desert.