Gas prices in Europe have hit a three-month low, as demand from industry and households declines.
Prices at the Dutch Title Transfer Facility (TTF), Europe’s main trading hub, hovered around €150 per megawatt-hour on Monday. falling at times below that mark, to then close at €154 at the end of the day.
The last time prices fell below the €150 threshold was in early July.
It comes as the European Commission Announced EU gas storage facilities, which are essential for additional demand during the winter, were at more than 90% capacity.
The relatively good news offers the bloc some much-needed breathing space as it struggles to contain the energy crisis.
The latest prices are far from the historical record of €349 reached at the end of August, a month that raised alarm in the capitals and calls fed for an EU-wide cap on wholesale gas prices.
Prices, however, remain exceptionally high: a year ago, the TTF showed gas at €38 per megawatt-hour.
High gas prices have an indirect effect on the entire energy sector in Europe.
As the most expensive fuel needed to meet all energy demands, gas determines the final price of electricity. As gas prices skyrocket, so do household and business electric bills.
The EU is exploring different avenues, including target price caps and an alternative reference index to the TTF, in order to reduce the influence of gas prices on electricity, but the member states are still divided on which is the most appropriate and least risky path to follow.
The downward trend in gas prices will guide the ongoing debate and could serve as an argument for member states, such as Germany and the Netherlands, which have advocated more cautious methods rather than forceful market intervention.
“The decline in gas prices is due to the storages now being almost full and the mild temperatures so far,” Simone Tagliapietra, a senior fellow at the Bruegel think tank, told Euronews.
“More importantly, the markets are seeing a decline in demand, particularly in the industrial sector.”
Saving energy has become the central axis of the EU’s response to the energy crisis. Savings are seen as key to rebalancing the market supply-demand mismatch.
back in julymember states agreed on a first coordinated plan to reduce gas consumption by 15% from August to March.
The plan was designed as a preventive shield against Russia’s manipulation of gas supplies, which fueled market speculation and pushed prices to record highs.
The EU’s suspicions proved correct when the Kremlin to close the Nord Stream 1 pipeline in retaliation for Western sanctions.
A separate plan focused on mandatory energy savings during peak hours It was approved By the end of September.
The industrial sector has already been forced to cut production hours and save costs due to the energy crisis.
Industrial production in the eurozone fell by 2.3% in July compared to the previous month, according to Eurostat. Consumer confidence is at an all-time low lowest level recorded (-28.8% in the eurozone), falling stronger than during the peak of the COVID-19 pandemic.
An unofficial document produced by the European Commission showed large gas savings in most EU countries, although some, such as Ireland, Greece, Sweden and Spain, increased their consumption.
Christine Lagarde European Central Bank said last month, the economic outlook was “darkening” and business activity was set to “decelerate substantially.” Lagarde also forecast two consecutive quarters of economic contraction in winter, which would amount to a technical recession.
Analysts have said that while a recession would be painful for Europeans, it would reduce demand and further lower gasoline prices.