The gas price has fallen again in recent weeks and is now back around the low level of April 2024. This is good news for energy bills, but makes filling gas storage facilities less attractive this winter season. As a result, Dutch supplies are rapidly dwindling. As long as LNG ships continue to dock, this is not a pressing problem. However, in a world of geopolitical tensions, research institute TNO raises the question of whether we are leaving security of supply too much to the market.
After a dip, during which the price on the TTF futures market fell to over €26 per MWh in mid-December, the gas price rose again after the first week of January, reaching over €39 on January 30th. However, the gas price then fell again, erratically, reaching €30,53 per MWh at the time of writing (Tuesday afternoon, February 17th). This puts the gas price back at the low level of April 2024.
The relatively low gas price is also the reason why gas storage facilities are less full this year. Market participants are responsible for storage, but storing gas isn't profitable if winter prices aren't higher than summer prices. There is a relatively large supply of LNG, especially from the US.
As a result, Dutch gas reserves are starting to run low. They're only 14,9% full (the EU-wide gas fill rate is 33,5%), according to information from Gas Infrastructure Europe. Although this is very low – a year ago, the fill rate was double that at 30,5% – outgoing Minister of Climate and Green Growth Sophie Hermans isn't worried. During the House of Representatives debate on the Climate and Green Growth budget last week, she said: "The storage facilities aren't the only source of our gas these days and weeks. They're the storage facilities we use during the winter season to meet the extra demand when it's cold, but we also still have imports and, of course, our own production. LNG imports continue as usual. Those ships keep coming. The relatively low price is a significant factor in that. The market simply keeps doing its job."
If all goes well, there won't be a problem, according to Rene Peters, director of gas technology at the TNO research institute. "We are well-connected with our neighbors, the United Kingdom, Germany, and Belgium, and we import gas from Norway. Moreover, there is significant import capacity for LNG, particularly from the US and Qatar," he writes on LinkedIn. But we live in an uncertain world: "What if those flows dry up due to sanctions or war, closing the Strait of Hormuz? Perhaps we should seriously consider a strategic or emergency reserve for gas, just as we have for oil?"
TNO also questions the wisdom of NAM shutting down all gas wells and removing all above-ground facilities. TNO advocates keeping part of the Groningen field available as an emergency reserve. The Netherlands relies on imports for 70% of its gas, and gas production from small fields in the North Sea (30% of our consumption) is declining rapidly, according to Peters, highlighting the bottlenecks. The EU imports more than 100 billion cubic meters from Norway through three pipelines and relies on the US for 60% of its LNG imports. If policy remains unchanged, that will rise to 80% by 2030, according to Peters.
Minister Hermans says she will keep a close eye on the filling rate. She indicates that security of supply and affordability must be balanced. "That's why it's always a matter of finding the right balance between the task and role you take on as a government and what you leave to the market when it comes to filling gas storage facilities." More to come, but not with Hermans, as he's moving to the Ministry of Health, Welfare and Sport.
Oil price seeks balance between geopolitical tensions and overproduction
The oil price remains relatively stable pending talks between the US and Iran on its nuclear program. At the time of writing, Brent crude oil costs $68,61 per barrel. On December 16, it was $58,92, an increase of more than 16% in two months. Concerns about geopolitical developments are driving up the oil price. Overproduction continues to play a role in the background, which is keeping the price in check. In its latest report, the International Energy Agency (IEA) slightly lowered its forecast for global oil demand growth for 2026 to 850.000 barrels per day. Economic uncertainties and higher oil prices are depressing consumption, according to the IEA. Meanwhile, supply continues to exceed demand, while OPEC countries are considering further increasing their production starting in April, according to various media outlets. In the first quarter of this year, OPEC+ kept oil production unchanged.
The price rose slightly on Monday because Iran held a military exercise in the Strait of Hormuz. This appears to be a warning to the US. Iran has previously threatened to block the strait if the US attacks it. A blockade would affect global oil and gas trade. A third of the world's oil and a fifth of its liquefied natural gas (primarily from Qatar) travel through this route.
Diesel price
On February 17, €132,61 per 100 liters from 4.000 liters was paid for diesel (LTO member price).
Stroom
On the European Power Exchange (Epex Spot), the daily average last week was between €85,07 and €102,50 per MWh.