Gas prices remained fairly steady this week. Temperature forecasts are mixed and meanwhile, increased LNG imports are causing concerns that prices will not fall. Meanwhile, electricity prices were on the high side due to low renewable production.
The gas price remained fairly stable last and early this week. The weather forecast is mixed and in addition, larger LNG imports keep the prices at the same level. On the other hand, the electricity price was on the high side, mainly due to low production from renewable energy sources.
The gas price was quite stable this week. On October 15, gas was traded for €39,97 per megawatt hour. After a slight drop, the price corrected later this week to €39,81.
The weather forecasts contribute to the balance on the gas market. In the short term, temperatures in Northern Europe remain above average for the time of year. As a result, the demand for gas for heating is lower than expected. On the other hand, the long-term forecasts show that temperatures in Northern Europe are falling.
LNG filling drives up price
The higher level of the gas price is clearly helping Europe to get more gas. For the first time in a long time, European imports of LNG are increasing significantly. At the moment, European LNG imports are at their highest point since April.
The larger LNG imports are mainly related to the development of the filling level. The gas reserves have remained fairly constant in recent weeks. At the end of September, the gas reserves were filled for roughly 94%. Since then, the gas reserves have been filled by another percentage point to 95%. In order to keep the reserves at the same level, the filling of the reserves has risen to the average again. Since the end of August, the speed at which the reserves are being replenished has been considerably below the historical average.
The renewed competition in the LNG market is not, however, causing downward momentum in the liquefied gas market. For most of last week, the benchmark Asian LNG price rose from $13,11 per MMBtu on October 15 to $13,50 on October 17. However, most of that increase was wiped out by the end of the week. By Friday, October 18, the price of liquefied gas had fallen to $13,28.
Electricity price shows strange pattern
The electricity price has been mostly high in recent days, although there were no major peaks. Only two days last week did the electricity price reach a level below €80 per megawatt hour. Although there were no major peaks. One day the price was above €100. It is remarkable that one of those days was on Wednesday. On that day the price of electricity dropped to €38,71. On Sunday 20 October the electricity price was even slightly lower. That day electricity was traded for €34,51 per day.
The Wednesday trough is particularly notable. Demand is generally high at this stage of the week. As a rule, electricity market prices are high in the middle of the week, because offices are full and industry is running at full capacity.
Renewable resources are failing
This somewhat strange development is directly related to the production from renewable sources. Only on Thursday and Sunday was significant amounts of wind energy generated. This ensures that prices are depressed almost all day. On the other days, solar energy was dominant. This ensures significantly lower prices when demand is highest, but does not depress the electricity price outside working hours. This resulted in a predominantly high price, without too strong peaks.
The total generation from renewable sources was also on the low side this week, which caused the prices to be high. In total, 11,9% of the electricity was generated from solar energy. The percentage of wind energy totaled 23,5%. This means that the total percentage of virtually 'free' energy is 35,4%. This is considerably lower than the rest of the year. Usually, this percentage is well above 50%. As a result of the low productivity of these sources, 42% of all electricity was generated by expensive gas. On top of that, there is another 7,3% of coal-fired electricity and another 7,3% of electricity from biomass.