The gas price has dropped again this week. Warmer weather is expected next week and that is welcome. The reserves are being used up a lot faster than last year. Meanwhile, the electricity price has peaked enormously due to a combination of high demand and low supply from renewable sources.
The gas price has fallen further this week. On Tuesday 10 December, gas was traded for €45,55 per megawatt hour. On Monday 16 December, the price had fallen to €40,32. The fall is particularly significant over a two-week period. Since Tuesday 3 December, the gas price has fallen by 16,97%.
An important factor that is putting pressure on the gas price is the mild temperature of the coming week. Up to and including 23 December, relatively warm weather is expected in North-Western Europe. The market therefore expects that the demand for heating will be lower in the coming weeks than is normal for this time of year. This has a major effect on prices, because the lower consumption is very welcome.
Last week, the amount of gas withdrawn from reserves moved towards the average, but later in the week consumption increased sharply again. Last week, 45,8 gigawatts were withdrawn from reserves. The long-term average shows that reserves decreased by 32,9 gigawatts in this period. This means that 39,3% more gas was withdrawn from reserves than average. As a result, the filling level of the gas reserves fell to 78,8%. This is approximately equal to the long-term average, while the filling level for this week was still clearly above the long-term average. In the period when the filling level is usually at its peak, the filling level was roughly 5 percentage points higher than average.
Replenishing reserves is still expensive. Significant demand from the European Union has kept the benchmark Asian LNG price quite high despite weak Chinese demand. Liquefied gas is now trading for less than $15 per MMbtu. But at $14,89, it is only 24 cents lower than its December 2 peak.
Electricity price peaks sharply
The electricity price was one of extremes this week. Partly due to a record price between 5:00 and 6:00, the electricity price reached its highest point since December 12 on Thursday, December 2022. That day, electricity was traded for €355,58 per megawatt hour. On Monday, December 16, the price reached its lowest point of the week. The electricity price was an exceptionally low level of €59,55.
The entire autumn has been below seasonal standards and this was noticeable on the electricity markets. This was the case again this week. This week, 30,3% of all electricity was generated by wind turbines. In addition, the output of solar panels was weak. Due to the grey weather, only 2,4% of all electricity was generated by solar panels. The total generation from renewable sources therefore remains just under a third at 32,7%. This translated into a considerable use of fossil sources. In total, 35,8% of all electricity was generated by natural gas. In addition, coal-fired power stations were used extensively. The total percentage of coal-fired power came to 15,7%.
This was also the main cause of the record price on Thursday. Between 5:00 and 6:00 in the morning, the electricity market recorded a record price. The price per megawatt hour even reached €1.200 that hour. The rest of the day, electricity was also expensive. Due to the gray but windless weather, wind turbines and solar panels hardly produced any power. On top of that, a lot of power was exported to Germany, which meant that demand was higher than usual.