Stabilising prices: A man watches as a ship carrying liquefied gas approaches a floating terminal in Omisalj, Croatia. Gas futures are down by two-thirds so far this year. — AFP
LONDON: European gas prices have plunged to the lowest since mid-2021, when Russia was just beginning to squeeze supplies before its invasion of Ukraine, helping to reverse a surge in inflation and bring relief to consumers.
The slump – gas futures are down by two-thirds already this year – hasn’t just eased the pressure on household budgets.
It also undermines one of the biggest bargaining chips held by President Vladimir Putin – the ability to squeeze the region’s gas supplies.
With some traders predicting short-term prices could even go negative at times this summer, the picture couldn’t be more different from May last year.
Back then, futures were quadruple what they are now and countries were forced to revive coal generation to keep the lights on after Russia slashed gas supplies.
There were also worries about shortages and whether Europe would be able to build gas storage levels before winter.
Now, stockpiles are above average and might even be filled during the summer, and ahead of schedule.
Benchmark Dutch futures have fallen for eight straight weeks and are below €25 (RM142.01) per megawatt hour, the lowest since May 2021.
Increased imports of liquefied natural gas to replace Russian supplies have helped, as did a relatively mild winter, which meant the region didn’t need to dip into storage sites too extensively.
Reserves are almost 67% full for Europe, compared with a five-year average of about 50%. German stockpiles are at 73%, according to data from Gas Infrastructure Europe. — Bloomberg
