Natural gas prices have started rising again this month, following the lowest level for several years being posted at the start of June. There are several demand and supply-related factors at play.
Whereas at the start of June, natural gas futures on the Netherlands-based Title Transfer Facility (TTF) market had dipped below €25 per MWh, as of Thursday the level had risen again, to above €40.
Board member at natural gas market leader Eesti Gaas Raul Kotov told ERR the current rise is primarily the result of prolonged maintenance work at a Norwegian gas production plant. "Since this has come as a surprise to market participants, the price of gas has moved upwards," adding that the issues in Norway are likely to be temporary in nature," Kotov said.
Kotov added that the arrival of hot weather and low wind have respectively increased demand, primarily in relation to cooling systems, and reduced supply from renewable sources, and these factors have exerted an upward effect on price-per-MWh.
This effect may continue into July and August, he added.
A planned closure of a Dutch gas extraction field and competition from suppliers in Asia have also had an influence on natural gas price.
Additionally, the risk that European price levels would not be sufficient to attract Liquefied Natural Gas (LNG) supplies, a vital source of natural gas if aiming to decouple wholly from purchasing Russian-supplied gas, has helped to push prices up.
At 2 p.m. Thursday the TTF price for the next month peaked at over €49 , then fell back to close to €41. August futures were traded at €46 per MWh, while for October the price was over €50 per MWh.
At the start of the week, multinational oil and gas giant Shell announced that maintenance work at the Norwegian Nyhmana gas processing plant would be extended in duration, while in the Netherlands, authorities want to close down permanently the onshore Groningen gas field, the largest in Europe, later this year.
2021-2022, natural gas prices soared, topping out at €340 per MWh in August last year, but it started to fall thereafter. At the start of 2023, the price stood at €100 per MWh, dropping as low as €25 per MWh at the start of this month – a level not seen for several years.
Editor: Andrew Whyte, Barbara Oja