The gas price briefly exceeded €50 this week, but then dropped back to the level of the beginning of the week. The reserves have not been used up so quickly in seven years. However, because there is no acute shortage, the high consumption has little effect on the price. In the meantime, the electricity market paints a diffuse picture.
The gas price has rebounded this week after the sharp increase. On Thursday 2 January, the gas price peaked at €50,27 per megawatt hour. On Tuesday 6 January, the price on the TTF had fallen to the lowest level of 2025. The gas price fell by 4,2% to €48,17.
The weather remains the main short-term factor on the European gas market. Early January temperatures are still on the high side, but this is likely to change soon. In Northern Europe, significantly lower temperatures are expected in the coming weeks. This resulted in a price of over €50 in the middle of last week. Prices have now fallen considerably as the news has been processed and the realisation has sunk in that shortages are not likely this year.
Gas reserves are declining sharply
However, the colder weather than we have been used to in recent years is causing reserves to run out much faster. Due to the cold weather in Northern Europe, gas reserves have run out the fastest in no less than seven years. Gas reserves have fallen by more than 25 percentage points since the end of the summer, which has not happened since 2018.
However, the sharp decline in gas reserves is not affecting the gas price. The reserves are not running out fast enough to cause acute shortages. That does not mean that the situation does not entail risks. If the reserves continue to run out at this rate, it could prove more difficult than in previous years to fill the reserves (almost) completely. That risk is far from averted. For the time being, the gas reserves continue to decline more sharply than you would expect based on the long-term average.
LNG price continues to rise
Meanwhile, the LNG price increased slightly last week. Demand for LNG remains strong for the time of year due to the strong European gas demand. The fact that prices remain somewhat under control is due to the increase in global supply. The United States in particular is increasingly bringing liquefied gas onto the market. In December, the US exported no less than 4,5% more than in the same month of 2023. Total exports amounted to 8,5 million tonnes of LNG. Total exports for the entire year amounted to 88,3 million tonnes. That is an increase of 4,5% compared to the previous year. In 2023, exports amounted to 84,5 million tonnes.
Electricity price high, but falling sharply
Meanwhile, the price of electricity fluctuated considerably this week. The electricity price was quite high in the first days of the new year. On the first day of the year, the electricity prices were quite low. Between Thursday 2 and Sunday 4 January, the price was above €100 per megawatt hour. On Monday 6 January, the price dropped to €54,85.
Last week, a considerable amount of renewable energy was generated for the time of year. In total, 46,7% of all electricity was generated by solar and wind energy. Wind energy in particular was dominant with a percentage of 43%. In practice, it was very windy for several days and there was no wind for a number of other days. This caused major peaks and troughs on the electricity market. The mild and sunny weather caused a significant increase in the electricity price between 2 and 4 January.
Due to the mild weather, little wind energy was generated, which was compensated for by a higher efficiency of solar panels on Thursday 2 January. This caused a significant peak in the generation of renewable energy. At this time of year, such a peak only depresses prices for a short time, as the number of hours of sunshine is low at this time of year. On Monday 6 January, a particularly large amount of wind energy was generated. In the morning, the capacity was constantly around 10 gigawatts per 10 minutes and in the afternoon the level dropped to around 7,7 gigawatts per 10 minutes. This caused considerable pressure on electricity prices.