MOSCOW, September 4 Exchange gas prices in Europe are moving further and further away from the peak values of the past year, in summer their average price, according to the London ICE exchange, fell to 365 dollars per thousand cubic meters. However, in autumn they may rise again — up to 600-800 dollars per thousand cubic meters, Igor Galaktionov, an expert on the stock market at BCS World of Investments, suggested in a commentary.
«High inventory levels in (European — ed.) Underground Gas Storage (UGS) provides a good margin of safety in case of cold snaps or episodic supply problems. However, in case of prolonged cold weather, prices can move into a higher trading range of $ 600-800 per thousand cubic meters,» the source said.
Price volatility
Gas prices continued to show volatility in summer. In the first days of June, they dropped to the minimum levels — about $ 255 per thousand cubic meters, and peaked above $ 555 — they reached already in the middle of the month. Then, in July, they began to decline, but in August they rose again amid fears of strikes at large LNG plants of the American oil and gas Chevron in Australia.
The average settlement price of the nearest futures on the TTF index rose to $395 in August, and by the end of the summer it amounted to $365. At the same time, in August last year, the price slightly exceeded $2,450, which was a record for the entire history of the operation of gas hubs in Europe — since 1996.
In the context of a seasonal decline in demand for gas in September, prices may remain under pressure, the expert believes. Weather conditions will play an important role in changes in gas prices. The higher the average temperature in the heating season, the easier it is for the EU to get through the heating season, Galaktionov explains.
Gas reserves for winter
Europe ended the heating season in early April with one of the best results in terms of gas reserves — above 55%, which is comparable only to 2020. Warm weather in winter helped Europe to get through the 2022-2023 heating season, but there are no guarantees of such a gift in the upcoming heating season, Gazprom noted.
Over the summer, European companies pumped more than 25 billion cubic meters of gas into underground gas storage facilities, and the level of their filling increased by 23.6 percentage points, to 92.8% on the last day of August.
By winter, European countries had stockpiled more than 100 billion cubic meters of gas, and the figure at the beginning of autumn was a record and continues to grow. Most of the gas is now in storage in Germany (23.1 billion cubic meters), Italy (17.7 billion) and France (11.9 billion cubic meters).
The historical maximum UGS occupancy in Europe — 97.86% — was observed four years ago. If the weather remains warm for the season and gas supplies are stable, European countries could break the record in less than two months.
LNG purchases
LNG imports in the EU in August fell to the lowest level in a year and a half — about 9.8 billion cubic meters, follows from the GIE data. European countries have reduced purchases amid low demand and high filling levels of gas storage facilities.
In July, the figure was almost 11 billion cubic meters, while in June it was 11.7 billion. Total purchases in the summer amounted to 32.5 billion cubic meters.
Demand for LNG in the region is unlikely to grow in September, but since October, due to a cold snap and the beginning of the heating season, imports will recover, Galaktionov concluded.