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Europe Gas Prices To Fall Throughout 2024 Amid High Storage Levels

Gas prices in Europe could plunge as low as $6.70 per million British thermal units (MMBtu) this summer thanks to a mild winter and ample gas inventories, Wood Mackenzie has said in a new report

The report states that gas markets kicked off the current year on a more bullish note as colder weather swept through Europe while industrial demand maintained its recovering trend, increasing 12% year-on-year in January and around 6% in February. 

WoodMac has forecast that household gas demand in Europe will increase by 12 billion cu m (bcm) in 2024, under normal weather conditions, while industrial demand will grow by 5.5 bcm as the EU economy rebounds in the second half of the year. However, 9 bcm less gas will go into power generation, implying that overall European demand is set to increase by 9 bcm. Still, it won’t be enough to support higher gas prices with storage levels at record highs.

With storage levels nearing full capacity towards the end of the summer, there will be up to 10 bcm of excess supply that will need to either be piped into underground storage facilities in Ukraine or floated in LNG vessels. This means that a higher summer-winter differential is required to balance the market, compared to what the current forward curve suggests, putting downward pressure on Q3 prices,” Mauro Chavez, Director of Europe Gas & LNG Markets at Wood Mackenzie has said.

With the European gas withdrawal season almost at end, inventories stood at 70.78 bcm on 10 March, higher y/y by 5.61 bcm and 21.41 bcm above the five-year average as per Gas Infrastructure Europe (GIE) data. Commodity analysts at Standard Chartered have predicted that the end-season inventory level will exceed 68 bcm. 

Gas prices in Europe remain depressed, with the front-month Dutch Title Transfer Facility (TTF) falling EUR 1.955 per megawatt hour (MWh) to settle at EUR 24.93/MWh on 11 March. That’s  53% lower y/y and 81% lower than two years ago in the immediate wake of Russia’s invasion of Ukraine.

By Alex Kimani for Oilprice.com

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  • George Doolittle on March 18 2024 said:
    This is still a crazy high price for "the juice"(electrons over a grid.) energy demand excepting special use cases for Europe remains quite low still though especially when compared to say China or the USA so any sudden alteration in power demand caused in particular by adoption of The Tesla plus IBM dispatch system and truly awesome amounts of power might suddenly become available at certain times Europe wide possibly. Also presumably reliability of the grid greatly improved in response to constant nuke threats from Putin Russia. So far no price collapse has played out starting in Europe then entering into across the Atlantic upon the USA but all of the "ingredients" for such a collapse are currently in place in particular Cybertruck vtog, continued build out of windpower, new solar powered car possibly, continued boom in natural gas production, use of massive methane powered rockets, battery electric vehicles in both Europe and the USA reaching a critical mass, further improvements in connectivity, further efficiency gains because of the War going on, massive deficits weighing on growth globally excepting in the USA, inverted yield curve, falling prices for batteries is a big one actually new nuclear power in the USA and Finland now online, old nuclear power in Japan coming on line, further build out of rail infrastructure in the USA, more people using public transit in the USA, electric vans starting to come into widespread use in both Europe and North America, an online trend for "modern homesteading" and sailing adventures, a possible massive real estate correction underway globally, Russia still stuck deep inside Ukraine in an endless War for them and all that comes with that so definitely pays to do your homework in this regard right now today. Any number of breakthroughs in say vehicle autonomy, super conducting materials, space based computing systems you name it a massive price collapse

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