Warm weather sees gas prices slide

A gas hob.
A gas hob. Source: Priit Mürk/ERR

The market price of natural gas has fallen considerably due to relatively warm weather, which is also forecast to continue, Eesti Gaas CEO Margus Kaasik said. The price drop should reach Estonian consumers in February.

The price of a megawatt-hour (MWh) of natural gas has dropped from €130 a week ago to around €100 on the Dutch TTF exchange.

Gas company Eesti Gaas CEO Margus Kaasik told ERR that the main reason for the lower price is warm weather, which is forecast to continue in the coming days and weeks.

"This seems to be the main factor affecting the situation. The capacity of European gas tanks now is crucial in terms of the situation next winter. A warm winter and full tanks could drive prices down further. "We saw colder weather forecasts hike the prices to around €130 a few weeks ago. Now, the forecasts have changed, and the price is coming down."

While January, February and March are still to come, long-term forecasts suggest the winter will be mild. Gas tanks are full and there is plenty of LNG available, whereas milder weather could mean there will be more gas in storage by spring than usual, which would calm the market.

Kaasik said that the European Union's Monday gas price cap is not tied to current prices.

"Prices started going down before the agreement was reached, and we are considerably below that €180/MWh cap today," the Eesti Gaas head said.

Kaasik remarked that the price drop will reach Estonian consumers with a delay as the index based on which Eesti Gaas buys gas will not drop to the TTF level by January.

Eesti Gaas looks at the price two months from the end of every month. If the situation is unchanged, with the price around €100 by late December, this should make it possible to lower prices in February. It is too soon to talk about exact figures as the calm holiday season could have further positive effect in store.

"We remain hopeful," he said.

Eesti Gaas' flexible package price was €1.75 per cubic meter in December, down from €2.85 in November.


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Editor: Marcus Turovski

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