The price of natural gas futures, which in recent months had remained above €50 per megawatt-hour on the Dutch Title Transfer Facility (TTF) gas exchange, reaching as high as €59 for March contracts, then started to decline from mid-February.

This week, the price of natural gas has risen slightly again, hovering around €46 per megawatt-hour. April futures prices temporarily dropped to around €41 per megawatt-hour mid-week last week.

According to Kristofer Vähi, portfolio manager at Elenger/Eesti Gaas, the price of gas has been driven up since November by lower levels of gas storage in Europe and the EU's obligation to refill storage facilities in the summer.

These factors, along with geopolitical issues, have also contributed to short-term price fluctuations, he said.

"When reports emerged that Europe's largest countries wanted to ease gas storage requirements, this alleviated price pressure for the summer. Discussions about Ukraine's peace plans also had a positive effect," Vähi said.

Vähi added that the gas price drop, influenced by peace plans, speculation on reducing storage obligations, and previous rapid price increases that made European prices higher than coal and Asian gas, encouraged additional LNG shipments.

The meeting between the Ukrainian and U.S. presidents led to a rise in prices due to disagreements over peace plans.

Magnus Truupõld, an electricity and gas trader at fuel retailer Alexela, meanwhile said gas prices are currently also influenced by potential U.S. import tariffs, which would reduce demand for European goods.

This, in turn, would lower European gas consumption and consequently drive down gas prices, Truupõld added.

While future contracts usually show more month-to-month price dynamics, transactions for the rest of the year are currently trading at €45-46 per megawatt-hour.

Vähi noted that the state of gas storage facilities will impact the price curve for both the upcoming summer and next winter.

Additional Liquefied Natural Gas (LNG) production capacity is expected by 2025-2026, though often delayed.

Truupõld added that the flat futures price curve through to next winter does not incentivize market participants to stockpile gas.

With the European Commission's targets requiring EU gas storage to be 90 percent full by November 1, and 270 terawatt-hours less gas in storage than last year, an additional 400 LNG shipments will be needed in 2025 to meet these targets.

For this reason, summer gas prices will remain relatively high.

--

Follow ERR News on Facebook and Twitter and never miss an update!