Will the heat continue to cool gas prices in Europe?
In October in Europe, thanks to higher than average temperatures, gas prices fell by more than 40 percent and storage was almost full. But analysts are not ruling out the rise in prices in the winter. Facts, numbers and insights
In October, the prices of natural gas with short-term delivery in Europe fell by more than 40 percent, alleviating – but perhaps only temporarily – the continent's energy crisis.
ABOVE AVERAGE TEMPERATURES
The drop in prices is due to the unusually high temperatures for this time of year, which have reduced the demand for heating fuel. In Italy, Spain, France and even in Germany they reached or exceeded 25 ° C. Slovenia and Croatia will likely have their warmest October ever. In London, UK, it reached 22.9 ° C.
ALMOST FULL STORAGE
The heat has kept consumption down and limited gas withdrawals from almost full storage: the European Union average is around 94 per cent ; the goal was to reach at least 80 percent by 1 November, in order to compensate for the drop in supplies from Russia and avoid an energy crisis during the winter.
At the end of October 2021, European stocks were 77 per cent full.
THE CONTRIBUTION OF NORWAY, LNG AND WIND
Europe is managing to mitigate the shortage of Russian gas via pipelines thanks to abundant supplies of gas from Norway (via pipes) and liquefied gas (via ship). Fuel prices are also low due to good wind power generation, which is reducing the need for gas for electricity generation.
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WILL GAS PRICES GO UP SOON?
Although gas prices have fallen compared to the peaks of the previous months, they are still much higher than the values of previous years. And it is not excluded that they may return to growth soon: a report by the rating agency Fitch, in fact, argues that the markets expect a recovery, considering the differential between the spot prices (the wholesale and daily market) and the forward ones. to a month.
Reuters writes that front month gas contracts in the Netherlands, the benchmark for the European market, are around 100 euros per megawatt hour: 67 percent less than the August highs, but 12.6 percent. more on an annual basis.
WHAT THE WEATHER FORECASTS SAY
Meteo France, France's national meteorological service, predicts that above-average temperatures in France will continue into December. In Italy, Colonel Mario Giuliacci told the Energia Oltre news agency that in Italy the heat should “continue until the first week of November inclusive. Then from the second we should return to the temperatures of the period, on average between 15 and 20 degrees ".
The difference between a mild and a harsh winter, in terms of gas consumption, is around 25 billion cubic meters, or 7-8 per cent of European demand.
WHAT CHANGES FOR CONSUMERS AND BUSINESSES?
Falling wholesale gas prices do not immediately translate into lower retail prices for households and businesses. In fact, suppliers purchase energy which they then resell to customers with an advance period of about six months: therefore, changes in wholesale prices (downwards or upwards) do not have an instant impact on bills.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/calo-prezzi-gas-ottobre-mite/ on Tue, 01 Nov 2022 07:33:48 +0000.