After a period of strong peaks and troughs, the gas price remains around €200. The EU is well on its way to becoming independent from Russian gas. Major steps have already been taken in this direction, but we are not there yet, warned European Commission President Ursula von der Leyen in the State of the Union today (Wednesday 14 September).
At the end of August, the gas price still rose to unprecedented heights. The gas quotation on the TTF rose to €339,20 per MWh. This month the way down has been found again. The market has calmed down somewhat and the biggest price shocks seem to be behind us for the time being. This week, the gas price plunged below €200 for the first time in a month. The lowest point was on Monday September 12 when the TTF closed at €190,59. During the writing of this article, the gas price has again jumped up and stands at €214 per MWh.
Analysts attribute the fall in the gas price to a large extent to the zeal with which the European member states are trying to become independent of gas from Russia. The market is also responding positively to the filling level of European gas storage facilities. On average, gas storage facilities in the European Union are 84% full. That is slightly more than the five-year average. In the latest interim position, the Dutch surcharges are 82% full.
Further decline ahead
The American investment bank Goldman Sachs expects that the European gas price could fall further to €2023 per MWh in the first quarter of 100. That is half the current price. Such a sharp fall in prices is partly possible due to the measures taken by the European Commission to become less dependent on Russian gas. According to the bank, there must be a mild winter in the EU for the price to actually drop to €100 per MWh.
Uncertainty about Russia's gas supply continues to hang over the market. For example, Nord Stream 1 is still not operational. As of August 31, Gazprom has been claiming repairs to the pipeline. It was previously stated that the repair work would only take three days, but the gas supply has now been disrupted for two weeks. Given the price movement on the TTF, the market seems to be becoming less sensitive to the problems with the supply of gas from Russia.
Intervening in the market
Ursula von der Leyen strongly criticized Russia in her State of the Union speech today. "Russia continues to actively manipulate our energy market. People would rather flare the gas than deliver it. This market no longer works." In addition, the Commission wants to skim the profits of companies that make a lot of money from the energy crisis.The EU also wants to intervene actively in the energy market, including talks about price caps.
A gas price cap is met with fierce resistance. Putin has already slipped that if the EU introduces a maximum price for gas from Russia, he will no longer supply at all. Norwegian Prime Minister Jonas Gahr Støre - the main gas supplier to the EU - also said he was not in favor of a maximum price. This does not solve the underlying problem, a lack of gas on the European market. Within the EU, German Chancellor Olaf Scholz has also spoken out against a maximum gas price. According to Scholz, the EU has no legal means to enforce a lower price from foreign suppliers. There is a risk that gas suppliers will ignore the EU if they can get more for gas in other regions. Even a price cap on gas from Russia can immediately cause problems for countries in Central and Eastern Europe that still receive gas from Russia.
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