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Technical facilities for the storage of natural gas in caverns: "The market is currently oversupplied"
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Hauke-Christian Dittrich / dpa
European natural gas costs lower than at any time in almost two years. On Thursday, the trend-setting futures contract TTF for delivery in one month was traded on the Amsterdam Stock Exchange at 25.80 euros per megawatt hour. The last time natural gas was this cheap was in June 2021, when analysts explained the price decline with an oversupply in the natural gas market, among other things, and did not want to rule out a further price decline.
The price of European natural gas has been on a downward trend since the end of last year. Since then, the commodity has fallen sharply in price after rising drastically last year due to the consequences of Russia's war of aggression against Ukraine. At its peak, a record price of more than 300 euros per megawatt hour was paid last summer. At the time, the halt in Russian gas supplies had stoked fears of an energy crisis.
While gas prices are falling, gas storage facilities in Germany continue to be filled. According to the latest data from the European storage association GIE, the filling level in all German storage facilities was 23.72 percent on May 76. Gas reserves have been rising almost continuously for weeks and are significantly higher than last year's figure. The reasons for the higher level are imports of liquefied natural gas, a comparatively mild winter and savings, especially in industry.
"The market is currently oversupplied," said Philippe Francois of energy trading house Danske Commodities, explaining the decline in gas prices. If this development does not change fundamentally, he believes that the price of natural gas will continue to fall in the summer.
However, market observers also pointed to the weaker economy, which is likely to lead to lower demand. According to new data from the Federal Statistical Office, Germany, as the largest European economy, slipped into a technical recession in winter. But other major economies are also being weighed down by rising interest rates.
The price of European natural gas is now well below the level it had just before the start of the war in Ukraine in February 2022. However, natural gas for delivery in a month before 2021 had consistently cost noticeably less than 20 euros per megawatt hour.
kko/dpa-AFX