The price of European natural gas has continued its downward trend in recent trading days with the TTF futures contract for Dutch natural gas falling to €76.18/MWh. European natural gas last traded at these price levels in February 2022, before the start of the war in Ukraine. On December 28th, the price of gas had fallen for eight successive trading days.
The TTF futures contract has fallen by around €60/MWh hour since mid-December after recording its highest price in history this past summer at €345/MWh. At that time, a halted supply of natural gas from Russia triggered a sharp rise in the price.
The price drop is mostly explained by rising temperatures since mid-December. The mild weather is also keeping consumption of natural gas low, which in turn has led to more natural gas being stored.
For the time being, however, the lower market prices will have no consequences for consumers. Because most customers have contracts without ‘floating’ tariffs, short-term price fluctuations on the market are not reflected in them.
Despite the recent drop, the price of European natural gas is still at a comparatively high level. In 2020, quotations for the TTF futures contract were still below the €20 mark. In addition, gas prices are likely to rise again in spring because storage facilities will have to be refilled for the coming winter.
This has caused the German Minister of Economy Robert Habeck (Greens) to remain cautious in his prognosis for when the reduction of gas prices will be passed down to customers. “When are prices going to fall? I hope that things will be better by the end of 2023, if not at the level of 2021,” Habeck said to the German Press Agency DPA, adding that customers will have to “bear with higher prices” throughout the next year.