Why are wholesale gas prices falling now?

Just two months ago, at the end of August, the price of natural gas in the markets broke a new record, climbing to 346 euros per megawatt hour in the futures contracts on the Dutch Title Transfer Facility, a virtual point of negotiation and trading of natural gas. Since then the wholesale price of natural gas has been on a downward trend. At the beginning of last week, the price fell below the psychological threshold of 100 euros and stood at 95 euros per megawatt hour, i.e. 9.5 cents per kilowatt hour.

There are many reasons for the drop in prices. The fear of energy sufficiency problems in winter is no longer as intense as a few months earlier. In western Europe the temperatures are quite mild for the season and forecasts until mid-November call for temperatures around 15 degrees. Consequently, heating in homes and businesses is, for now, limited to a minimum.

Alongside Germany, the largest customer of natural gas in the EU, managed to fill the natural gas tanks already to 97% and in fact much faster than expected. It should be noted that the spike in natural gas prices, following the shutdown of the Nord Stream pipeline, has motivated many operators to transport liquefied natural gas to European ports, significantly increasing LNG supply. This fact partly explains why Berlin is hesitant about a ceiling on the price of natural gas at the European level. Indicative that in front of the ports of Spain, which has the largest natural gas reservoirs in the EU, LNG tankers they form queues waiting to unload.

Household bills will decrease in a second year

An important message for easing the tense situation in the natural gas market is also sent by the EU energy ministers, who, despite the fact that they have not yet reached concrete decisions, as envisioned by the EU Summit, are raising expectations for a decisive government intervention in the market resulting in falling prices. It is also positively valued that the member countries are planning common natural gas markets.

Since the end of August, the price of electricity has also decreased, which is already having an effect on new household contracts. The drop in the wholesale price of natural gas or electricity will, however, reach the bills of households and businesses in the second year.

Economists also draw positive conclusions about the course of the economy since the drop in natural gas prices. Private bank Berenberg expects the risk of gas shortages to trigger a recession in Germany and the rest of Europe. However, he believes that the recession will be more limiteddue to the downward trend in natural gas prices.

DW – Stefanos Georgakopoulos

Read the News today and get the latest news.
Follow Skai.gr on Google News and be the first to know all the news.