Warm weather is rapidly reducing the price of gas. Gas is the cheapest in 4 months and is still falling significantly – iMeteo.sk

In the energy sector, we can finally hear favorable news. The price of gas started to drop sharply, and several facts contributed to this. The weather also has a fundamental influence, which is related to the fact that you will not need so much gas. Russia, which was the largest supplier of gas, is becoming insignificant. It supplies less than a tenth of gas to the European market. Today, Spain is reporting temperatures of up to +35 °C, and it is similarly warm in France, where temperatures hover around the +30 °C mark. It is also very warm in our area. Temperatures exceed the value of a summer day in several states and this has a fundamental impact on the energy sector as well. This is because Europe does not need as much gas in the current period as is usual at the current time of year, and the current climatological outlook says that the above-average warm weather should continue in Europe in the coming weeks. There is plenty of gas The warm weather in Europe currently means that gas is needed less than is usual at the current time of year. The heating season is postponed and we do not currently need gas even for heating, and according to forecasts, we will not need it. Due to favorable weather and almost full gas reservoirs, gas began to be used for the production of electricity, the price of which also began to fall. There are so many tankers with liquefied natural gas that just off the coast of the Iberian Peninsula there are more than 30 tankers that have nowhere to unload the gas. Due to the warm weather, Europe consumes less gas than is usual at the current time of year. In addition to all this, gas is being saved, gas consumption has decreased and gas storage tanks are almost full in Europe, with their capacity approaching the technological ceiling. In short, there is currently enough gas and there should be enough of it, which is reflected in the price of gas. Gas is the cheapest in recent months The price of gas began to rise in mid-June, when Russia stopped supplying gas under various pretexts. Even then, the price of gas was around €95 per MWh. From mid-June, the price began to rise significantly and rose as Russia supplied less and less gas. We recorded record prices at the end of August, when the price of gas rose to €320 per MWh. Then Russia shut down the Nord Stream gas pipelines and Europe started to worry. Before the war, Russia supplied Europe with about 40% of gas consumption in the entire EU and was the most important supplier. Today, Russia has a bad reputation in the energy market. By limiting supplies, it violated current contracts, for which lawsuits are being prepared, and Europe began to look for alternative sources. Dependence on Russia began to decline. While Russia supplied up to 40% of gas to Europe a year ago, it is currently less than 8%, which also affects gas prices. The price of gas started to fall sharply from the August highs. The price is falling continuously along with the arrival of individual favorable news for the European energy sector. From the August price of €320 per MWh, today we reached €115 per MWh. Over the last month, the price of gas fell by 36%, while today it was up to 9%. The price of gas is thus close to the price that was on the markets roughly before the restriction of gas supplies from Russia. development of gas prices on the stock exchange, source: tradingeconomics.com Storage tanks are almost full Gas prices are certainly being boosted by the fact that Europe has started preparing for winter in a big way. It nationalized the storage facilities that were owned by Gazprom, which was deliberately leaving them empty to influence the price of gas, and currently there are more than 1000 TWh in storage in Europe, which is more than 92% of the total gas storage capacity in Europe. We are in a similar situation in Slovakia. The current storage capacity is more than 90% and we are still filling. Several EU countries report that their storage tanks are already full and have nothing to do with gas. Therefore, they began to burn gas and use it more and more for the production of electricity. Thanks to this, the price of electricity also drops sharply. development of gas prices, source: okte.sk The weather is and will be favorable. The weather, which is currently also a dominant factor, also favors a drop in gas prices. It is currently extremely warm in Europe and the latest forecasts and climatological outlook indicate that above average warm weather will continue in the coming weeks. According to predictions, above-average warm weather will prevail at least until the beginning of December. temperature anomalies for December to February, source: ECMWF By the beginning of December, the average temperature in Europe should be 2 to 5 °C higher than the long-term temperature normal, while climatological models warn that in the winter period, i.e. from December to February, temperatures in Europe should be at the level of temperature normal to slightly above normal. Fears about a hard winter are therefore meaningless. Intrusions of cold air are, of course, expected and it can be very cold temporarily, for example before Christmas, when an intrusion of cold air is expected, but overall the winter should be normal to slightly warmer. And favorable weather, of course, will continue to lower gas prices, if nothing major happens.