Gas prices in Europe are back to normal for the first time since the energy crisis

The European Natural Gas Prices fell below EUR30 per Megawatt Hour on Thursday for the first since the beginning of the energy crises. They reached their lowest level since June 20, 21.

The benchmark TTF price fell to EUR29.75/mwh on Monday, down by more than 8 percent for the day. This was at levels last seen in 2008, before Russia began to squeeze Europe’s gas pipeline supplies prior its invasion of Ukraine. TTF rose slightly later to close at EUR30/mwh.

Last summer, TTF prices were ten times higher than normal, reaching a peak of EUR340/mwh, after Russia cut gas exports to Europe. The fall in prices shows that Europe has mostly overcome the worst effects of Moscow’s weaponisation energy supply.

This is also an indication of the large amount of gas already in storage, as traders fill up ahead for next winter and the relatively low demand in the area.

Europe has been building up its gas inventory since the end of winter. Gas Infrastructure Europe, the industry’s trade body, reports that storage is nearly 65 percent full. This is nearly a fifth more than the 5-year average.

In January, I predicted that prices would fall below EUR30/mwh in the summer. I did not expect it to happen as soon as May,” said Tom Marzec Manser, an energy consultant at ICIS.

The TTF price has dropped for six weeks in a row, nearly 27 percent, since the end of March.

Will we see more downside in the short-term contract? Yes, no doubt,” Marzec-Manser said. He said that the lack of demand from Asia for super-chilled natural gas, which competed against Europe throughout last year for this fuel, was also a factor for European gas prices to trend lower.

Analysts and traders remain cautious despite the drop in gas prices as the global market is still finely balanced. The Russian pipeline flows into Europe are 90 percent lower than they were before the Ukraine invasion. Russia used to meet around 40% of EU demand.

In its latest quarterly report on the gas market, the International Energy Agency said that the balance between global demand and supply of gas is “subject to an unusually large range of uncertainties”. These include weather, the availability of LNG, and the possibility of a further decrease in Russian pipeline gas for Europe.

Even if the prices rise as the winter draws near, few believe they will reach the same levels at the heights of the crisis.

TTF traded at EUR30/mwh or less before Russia began to cut supplies in 2021, but not above.