The gas market was fairly steady this week and remains at a relatively high level. The nervousness surrounding Russian gas supplies remained a major factor this week. In addition, LNG remains expensive, but Europe is now the player that is pulling the price up. Meanwhile, electricity was quite expensive despite the significant production from renewable sources.
After several increases, the gas price has stagnated this week. On Tuesday, November 26, gas was traded for €47,77 per megawatt hour. On Monday, December 2, the gas price rose to €48,62. This was the highest point of the week, but is still within the previous range of November 2024.
The TTF remains roughly flat this week. The market is quite nervous about the supply of Russian gas now that Ukraine refuses to transport Russian gas after 2025. This week, a 3% supply cut caused additional tension.
On the other hand, the tension surrounding the speed at which the gas reserves are being used up has decreased somewhat. The speed at which the filling levels are falling is returning to normal. Until two weeks ago, the speed at which the gas reserves are being used up was clearly above average. Last week, the speed was roughly in line with the average again. As a result, the filling level fell this week from 87,9% on 23 November to 85,5% on 30 November.
LNG price remains high
Meanwhile, the LNG price is also stabilizing, at a level of around $15 per MMbtu. This level is below the European gas price, making the European market attractive again for LNG traders. The US Energy Agency (EIA) predicts that the LNG market will remain tight this year. So far, demand in both Asia and Europe seems to remain on the strong side. The EIA expects supply from the United States to increase somewhat. However, supply lags somewhat in the early winter. It will take several months for exports to reach peak levels.
In addition, the EIA expects Mexico to open a new LNG port on the east coast. Finally, the agency foresees new overseas LNG projects in Senegal and Mauritania. On the other hand, Russia has halted exports from its Arctic-2 facility due to sanctions against the country.
Seasonal pattern changes
In addition, European gas analysts write that traders expect seasonal patterns on the gas market to do a 180-degree turn. This year, gas prices rose significantly higher in the summer than in the winter, when demand is lowest. Analysts expect this pattern to return in the coming years. With Europe relying heavily on stocks and availability tight, prices are highest during the filling season. In the winter, when reserves are being used, prices are actually lower.
Electricity price
The price of electricity is again clearly higher than last week. At €124,78 per megawatt hour, the peak of Friday 29 November is clearly higher than last week. In addition, the price only fell below €100 for one day, compared to three days the week before. Finally, the price barely dropped during the weekend. Where the price on Sunday 24 November was €13,74, the price dropped to €1 on Sunday 94,35 December.
A relatively small decrease in generation from renewable sources was an important factor for the higher price level. In total, 41,6% of all energy was generated from renewable sources. Last week, this was still 43,5%. 34,7% of the electricity was generated from wind energy. Solar energy was responsible for 34,7%. As a result, the share of gas-fired power stations increased from 30,4% to 32,7%.
One reason for the significantly higher electricity price is a less stable generation from renewable sources. Last week, wind energy in particular provided almost constantly the same amount of renewable energy. This week, the amount fluctuated considerably during the days, which resulted in clear peaks. In addition, it did not help that a lot of electricity was generated at night, especially at the end of the working week, while demand is at its lowest. This caused the electricity price to be relatively high during the hours when demand is high.