The price of natural gas in Europe has fallen below the level before the war in Ukraine. One of the reasons is the high temperatures in Central Europe, thanks to which it has been possible to keep gas storage levels high.

When Russia attacked Ukraine, gas futures prices quickly rose to more than 100 euros per megawatt hour in February. The highest price spike was seen in August, when the price rose to well over 300 euros per megawatt hour. To curb the rise in prices, the EU implemented a series of measures, such as mandatory gas storage levels and consumption reduction targets.

Now the futures price is around 80 euros per megawatt hour. The price is the lowest it has been in ten months.

According to The Financial Times, the drop in prices seen now is due to the warm weather, which has reduced the need for heating. At the same time, it has been possible to fill up stocks in Europe, which were partially depleted in November.

Recently, storages have been filled at a faster rate than gas has been flowing out of them. Gas stocks are now fuller than at the same time last year.

A moment of joy?

However, the joy can be short-lived. The Financial Times warns that the gas market may remain tight in the coming year. For example, there is a strong demand for lng compared to production, especially if the Chinese economy starts to grow after the corona virus.

The energy ministers of the EU countries recently decided to set a price ceiling for natural gas, which is 180 euros per megawatt hour.

The price cap mechanism comes into effect if the gas price exceeds this level for three consecutive days.

In addition, the price must be 35 euros higher than the world market price of liquefied natural gas lng for three days as well.

The price ceiling mechanism will come into effect in mid-February. The price cap can be canceled if it causes disturbances in the market and gas availability.

Also seen in Finland

The high electricity prices seen in Finland are partly justified by expensive gas – European energy prices are also reflected here to the bottom.

Now the situation is getting easier in this respect.

Of course, in the short term, the price of Nordic electricity is affected by, for example, daily fluctuations in wind production and the introduction of Olkiluoto 3.

The price effects of gas on the price of electricity will become more visible in the longer term.