Even before Ukraine stopped sending Russian natural gas to Europe, gas prices had risen on major gas trading exchanges. Before the Christmas holidays, natural gas cost less than 46 euros per megawatt hour, but shortly before the New Year the price rose to more than 50 euros.
On Thursday, the price of the leading futures contract TTF for delivery in one month on the Amsterdam stock exchange was temporarily increased to 51 euros. However, during trading the price fell again to 49.54 euros per megawatt hour.
The current day-ahead gas price on the Austrian gas exchange CEGH is just over 50 euros, the same as at the end of December. The cessation of gas transit through Ukraine was expected and was therefore largely already priced in.
Gas transit suspended on New Year’s Day
As announced, transit has been completely halted since New Year’s morning. Ukraine had not renewed a transit contract to cut off Russia from further revenues, which the Kremlin is also using to finance its war against the neighboring country.
Last June, the share of Russian gas in EU imports was 18 percent, according to a report by the European Commission. Before the Russian attack began, this was 45 percent in 2021. However, after the transit stop via Ukraine, Russian gas also comes to the EU by sea in the form of liquefied natural gas (LNG).
Fewer reserves in the winter months
Analysts pointed to the decline in gas reserves in the winter months. Due to the loss of gas supplies from Russia, there is a risk that replenishing stocks will become more expensive, says commodity expert Lohmann Rasmussen of Global Risk Management, a service provider that deals with risk management in the energy sector.
According to the Ministry of Energy, Austria’s gas storage facilities were 78 percent full as of December 31; on the same day a year ago, storage facilities were 93 percent full.
Natural gas is twice as expensive as before the war in Ukraine
Since mid-December, the price of natural gas has shown a tendency to increase and has increased by approximately 26 percent during this period. However, the price is still well below the level reached in the initial phase of the Ukrainian war, namely more than 300 euros. Compared to the price level before the war in Ukraine, the price of gas has roughly doubled.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
