Experts explained the decline in stock prices for gas in Europe

MOSCOW, 16 Oct — PRIME. The decline in gas prices in Europe is due to the calming of the market against the backdrop of a high level of occupancy of underground gas storage facilities, but the region may face a new price surge, experts interviewed by RIA Novosti believe.

The estimated price of gas on the London ICE exchange on Friday fell to the lowest level since June 28 – $ 1,424.2 per thousand cubic meters. The figure for the first half of October averaged $1,625.2, down 15.5% from the average settlement price for the second half of September of $1,923.9 and 28.2% from the first half, when the figure was $2,262.2 .

The decrease in gas prices to the level of $1,500 per thousand cubic meters and below is caused by “relative calming of the market” against the backdrop of a high level of occupancy of underground gas storage facilities in the EU countries and an increase in LNG supplies, said Alexander Amiragyan, head of the Economics of Fuel and Energy Complex department of the Center for Strategic Research Foundation .

“However, in the event of some extraordinary conditions in terms of supply and demand, Europe may face a gas shortage and a surge in prices,” the analyst said.

PRICE DYNAMICS

Current gas prices are half the peaks of late August, but several times higher than last year, when gas prices were already at a record level. A noticeable increase in the cost of gas in Europe began in the spring of 2021, when the average price for the TTF index fluctuated in the range of $250-$300 per thousand cubic meters.

Last summer, the cost exceeded $600, and in winter it was already $2,000. In early March, due to fears of a ban on the import of Russian energy resources, quotes reached $3,892 per thousand cubic meters.

Gas prices in November may again jump above $ 2,000 per thousand cubic meters, Igor Galaktionov, an expert on the stock market at BCS Mir Investments, believes.

“At the end of October, the withdrawal season from storage will begin, while deliveries from Russia will be well below normal levels,” he said.

Amiragyan makes more reserved forecasts. The dynamics of gas prices in the coming months, he said, will be determined by supply and demand.

“In the case of a relatively warm winter and high electricity generation from renewable energy sources, primarily at wind farms, as well as stable gas supplies from Norway, North Africa and LNG, there are chances that the winter will pass without new price records,” the CSR expert believes.

FRAGILE BALANCE

Before the anomalous years of 2020–2021 — the coronavirus and the energy crisis — about 30% of European demand was usually met by Russian gas, but now these volumes are not there, says Sergey Kapitonov, an analyst at the Skoltech Energy Transition Project Center and ESG.

“Europe is playing a dangerous game,” he stresses. Although “not so huge” demand for gas and its “not so terrible” shortage are predicted, there are no guarantees that Europe will pass the autumn-winter period painlessly and gently, the analyst notes.

“Looking at the current gas balance in European countries, I would say that the risks of a significant increase in gas prices remain,” adds Kapitonov.

However, according to him, there are also no prerequisites that prices will fall – they will be “stably high while maintaining the risks of their growth exponentially against the backdrop of some extraordinary situation.” The balance is fragile, and it is impossible to talk about an unambiguous trend, the analyst concluded.