Gas market players were unimpressed by a few colder days in Europe. Well-stocked gas storage facilities are keeping the market in check and are even pushing the market down a bit now that the mild weather is returning. Russia's role in the European gas market remains a remarkable one and the European Commission turns a blind eye.
Despite the colder weather in recent days, gas contracts on the TTF were on a downward trend and lost approximately €5. For the first time since early October, the price fell below €40 per MWh. Yesterday (Tuesday December 5) the TTF closed at €38,13 per MWh.
According to analysts, the fact that the gas market is not very sensitive to the increased demand is due to the good supply of gas. As a result, there is little demand on inventory compared to last year. Last Saturday, European gas storage facilities were 94,4% full. The week before, the filling rate was 97,7%. Now that the weather in Europe is becoming milder, according to weather reports, it is expected that the demand for gas for heating will also drop somewhat.
Russia's role has not yet been fully played out in the European gas market. This is evident from an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA). The import of oil from Russia is under a magnifying glass, but the EU turns a blind eye to the import of LNG. About 21% of the LNG arriving at European ports falls outside the statistics for the goal of independence from fossil fuels from Russia by 2027 as set out in the REPowerEU plan. Belgium, France, Spain and the Netherlands are among the largest importers of LNG from Russia. Some of the gas is also exported again. According to IEEFA, 37% of the LNG that Belgium and France imported in the first three quarters of this year was also re-exported, mainly to destinations outside the EU.
Review of the gas market
Before the Russian invasion of Ukraine, European gas policy was mainly focused on direct deliveries of relatively cheap gas via pipelines from Russia. The EU has moved away from this and the emphasis is much more on LNG. And this means that the LNG market is subject to major changes, according to some analysts. Until a year and a half ago, Asia was by far the most important sales market for LNG. Now that Europe has also appeared in the firmament, LNG is becoming a truly globally traded commodity. The gas market was divided into regional markets where prices in, for example, the US and the EU did not have a strong correlation. Because a relatively large amount of natural gas is now liquefied and traded intercontinentally, the traditionally regional gas markets are becoming more sensitive to price fluctuations on the world market.