On the TTF gas exchange, natural gas futures prices fell sharply after former U.S. President Donald Trump announced the possibility of peace negotiations between Ukraine and Russia. The decline was significant, reaching nearly 9 percent. On Monday, the price of natural gas on the TTF stood at €59 per megawatt-hour — the highest in the past two years — but by Friday, it had dropped in some instances to below €49.

The price drop followed Trump's announcement, primarily due to easing concerns over supply disruptions. Additionally, weather forecasts predict warmer temperatures across Europe in the second half of February. However, Europe still faces challenges with gas reserves, as storage facilities are currently about 47 percent full — the lowest level since 2022. This has raised concerns about whether Europe's gas stocks will be sufficient for the next winter.

At the same time, if Russian gas flows to Western Europe via Ukraine were restored to pre-war levels, gas prices could drop by as much as 50 percent from current levels, according to Goldman Sachs, as reported by the Financial Times.

Easing European regulations could bring down prices

According to Estonian experts, the current price decline should not necessarily be seen as the start of a prolonged downward trend.

Marko Allikson, a board member at Baltic Energy Partners, told ERR that time will tell whether gas prices will continue to decline.

"The volatile nature of gas prices means they can fluctuate by more than 10 percent in a single day, both up and down. For now, this is just a short-term correction in a price trend that has been rising for 12 months," he said.

Allikson added that if Russian gas flows were indeed to resume, prices could drop to the levels seen in February of last year, around €23 per megawatt-hour.

Margus Kaasik, CEO of Elenger (formerly Eesti Gaas), noted that Trump's statements have had a favorable impact on prices, but they are not the only factor. Europe's relatively low gas reserves also play a role, as EU regulations require member states to fill storage facilities, regardless of whether prices are falling.

"This is a key factor, especially considering the EU's storage targets and potential national incentives to fill storage even when summer prices are higher than winter prices," Allikson explained.

Kaasik pointed out that the low storage levels and the obligation to refill them at any cost over the summer have been major drivers of price increases since last November.

"However, European storage facilities are not so empty that they cannot be refilled over the summer. The issue is more about regulatory obligations and the assumption that refilling must happen at any cost," he said.

At the same time, there has been growing debate in Europe about whether storage targets should be relaxed, which has also influenced gas prices.

"The recent proposals from Europe's largest economies — Germany, France and Italy — to ease EU gas storage requirements have reduced price pressure for the summer. Speculators who assumed Europe would be forced to buy gas at any price have started to scale back their positions," Kaasik explained.

If the EU relaxes regulations and allows the market to self-regulate, prices will continue to decline. Additionally, price movements will be influenced by signals coming from the U.S., Ukraine and Russia, Kaasik added.

"Right now, price fluctuations are closely tied to political developments and statements, making it nearly impossible to predict a price floor or target," he said.

A third key factor affecting gas prices is weather forecasts. Current predictions indicate stronger winds and higher air temperatures across Europe.

If one were to draw a straight line on a graph between the TTF price levels of February 23 last year and February 10 this year, it would show a steep upward slope: during this period, the price rose from €22 to nearly €59 per megawatt-hour.

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