The gas market has fallen this week. The market has been trending upwards in recent weeks, as hopes that Russia would supply gas to the EU faded. Favourable weather forecasts have depressed prices, which also applies to the electricity market quotations.
Sentiment on the gas market was slightly negative again this week, but the market was not as volatile as in previous weeks. On Tuesday 11 March, gas was traded for €42,71 per kilo. On Monday 17 March, the price dropped to €40,75.
The gas market has shown some recovery over the past two weeks. The rise started after the German Ministry of Economic Affairs refused to negotiate a deal with Russia to repair the Nord Stream pipeline and resume gas purchases. This has diminished hopes that cheap Russian gas would soon push prices on the European market down again.
Incidentally, this did not only lead to higher prices in the European Union. Prices also rose in the United States, as trade with Russia is a clear barrier to American LNG exports to the European Union. Since the war in Ukraine, the European Union has been by far the largest importer of American LNG. Due to the scarcity, the country also sees the European Union as one of its largest growth markets. In recent years, the European Union has built up a much larger supply capacity than is currently being used, and so far, member states have not been very successful in convincing other major players such as Qatar to enter into long-term contracts.
Favorable weather pushes down gas prices
Remarkably, this was not yet reflected on the leading Asian LNG market. Prices have been falling slightly in recent weeks and are therefore not experiencing the upturns seen on the European gas market. This is mainly due to lower demand on the Asian market. This market is currently between two peaks. In the summer, Asian demand for liquid gas is always considerably higher, due to higher electricity demand for air conditioning. In the winter, demand increases due to greater heating needs. However, temperatures are relatively moderate at this time of year, which means demand remains limited.
In Europe, too, the gas price has fallen again. The cold weather seems to be over sooner than initially thought. This will probably lead to lower consumption, as the demand for heating is decreasing. This is very desirable for Europe. Due to the cold weather, more gas has been extracted from the reserves than average in recent weeks. As a result, the European reserves were only 15% full on 35 March. Normally, that percentage is around 40%. This makes it a lot more difficult to meet the European Union's filling requirements of 90% than last year. In 2024, the reserves were still almost 60% full at that time.
Coal-fired power stations heavily utilised despite low gas consumption
The price of electricity was on the high side at the beginning of this week, but the price has since dropped considerably. From Tuesday 11 to Friday 14 March the price was above €100 per megawatt hour, with a peak of €121,37 on Thursday 13 March. As usual, the price dropped during the weekend, but the price of electricity was also lower on Monday 17 March. On that day the price was €95,03.
On the electricity market, production from renewable sources helped to drive prices down considerably. The sunny weather left its mark on the market, with solar panels generating no less than 25% of all electricity. On top of that, there was the occasional strong breeze. In total, 18,8% of all electricity was generated by wind turbines. This brings the total share of renewable energy to 43,2%.
This had clear effects on the demand for fossil energy. The share of gas-fired power stations dropped to only 23,1%. Remarkably, given this low percentage, coal-fired power stations continue to operate at full capacity. In total, coal provided 18,2% of all electricity.