January 28, 2023

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Gas, why the price is so low: when the bills are low

price Gas Declining again and reaching levels not seen in over a year, well before Russia’s invasion of Ukraine, which bodes well given the next phase Invoices. The TTF index of the Amsterdam Stock Exchange, the reference value for the formation of gas prices in Europe, has in fact reached 55.3 euros per MWh. After months of extraordinary increases, the price of gas has been declining for about a month, since an agreement was reached between European countries on a ceiling for the price of gas. However, analysts agree that it was not Ceiling price To positively influence the markets: the reasons are different, and there are also reasons to believe that the situation may change again for the worse.

Gas price is falling again

The TTF index of the Amsterdam Stock Exchange was 55.3 euros per MWh. A similar value has not been seen since September 2021, well before February 24, the day Russia invaded Ukraine to start the war and the resulting extraordinary increases in gas prices, among other things.

On February 23, the day before Russia invaded Ukraine, the monthly TTF index price of the Amsterdam Stock Exchange was €88 per MWh. Since then, there have been record increases, exceeding 345 euros on August 26. In general, the fund of funds price has always exceeded 100 euros, which is now defined as the “psychological limit”.

The celebrant Ceiling price Don’t lower your bills

After agreeing to Ceiling price In mid-December, the price trend was downward, to then fall below the €100 threshold in the last days of 2022. In the first weeks of 2023, the price of gas remained between €70 and €64 per MWh/ hour. However, the reason for the decline is not the gas price cap.

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Because the price of gas is going down

After agreement at the European level on Ceiling price The price of gas fell on the Amsterdam Stock Exchange starting the next day. But the reasons for the price drop are other and related to the demand for gas in the markets. The months of October, November and December are marked by unusually mild temperatures, several degrees above average.

In fact, the winter of 2022-2023 has yet to happen, and the anomalous heat has kept gas demand low, with consumption dropping significantly. According to the hump data processed by Today, In the last three months of 2022, about 5.6 billion cubic meters of gas was supplied in Italy compared to the same period in 2021. In addition to domestic consumption, lower demand from industry also played a role.

Made with prosperity

Low demand allowed stocks to remain half full. Italy has recently slipped below 80 percent, while the European average is 81.7 percent. Usually, according to the Agsi data processed by Today At this time of the year, stocks are lower than current levels due to winter temperatures: for example, on the same days in 2022 the stock level in Italy was 59 percent, about 20 percent below the current level. There is great optimism in Europe about the ability of member states to get through the winter without problems.

How much gas do we have for the winter?

In addition to the drop in demand for gas affected by rising temperatures, gas is also spreading on the European continent due to the arrival of ships loaded with LNG, LNG, from China. In fact, Chinese LNG exporters prefer the European market because of the full stocks in China and the resulting lower prices.

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Moreover, renewables are also helping to reduce the use of gas for electricity in Europe, as Germany produced an unprecedented amount of wind power on Saturday, while Britain also set a record last week.

What to expect for your bills: When they go down

If winter appears safe, fears turn to the spring of 2023, when European countries must fill stocks again in light of the coming winter. 2023 may be the first year in which Russian gas will be almost completely absent from the gas import portfolio of Europe and the countries of the world. LNG will play a leading role in replacing lost Russian supplies.

Russia returns gas to Europe: Putin is betting on it

However, the potential recovery of the Chinese economy caused by the abandonment of anti-coronavirus policy could divert LNG to China at the moment it is most needed in Europe. In addition, soon Italy and Europe will experience real temperatures in the winter For the second time since the end of summer, after the cold wave in mid-December. In fact, temperatures will be up to 4 degrees below the seasonal average. As a result, gas consumption is likely to accelerate, causing storage to be emptied more quickly

The cold wave in Italy and Europe increases gas consumption

As a result, the scarcity of gas availability may increase fears of rationing and power outages, leading to an upward trend in gas prices in the market. However, in the short term, the positive trend in prices seen so far bodes well for the bills.

When will we pay the gas bill less?

The price formation mechanism is actually based on the average price offer for the month, and given the prevailing trend in the first half of January, it is reasonable to expect the price of gas bills to decrease, starting from the following bill: date to Keep in mind that to know the amount of the January 2023 bill is The second business day of the following month, i.e. Thursday, February 2, 2023.

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