Could this be the start of a real lull? For several weeks, the price of gas on the European markets has experienced a marked decline. On Wednesday October 26, the Title Transfer Facility (TTF), the main reference on the Old Continent, fell below the 100 euro per megawatt hour (MWh) mark, against 110 euros on Monday, which now places it in the wake of the prices reached before the start of Russia’s invasion of Ukraine on February 24.
A level certainly still well above the average of 46 euros around which it sailed in 2021, but clearly below the highest, at 330 euros, reached in the middle of August. Peaks which had resulted in runaway electricity prices at 700 euros per MWh (against 180 euros per MWh on Wednesday). This relaxation could be all the more reassuring as in the United States, too, gas prices on the Texan market are falling as a result of production that is struggling to be sold.
So, real or temporary improvement? ” It is too early to tell. We will have to see how it evolves with the arrival of winter”explain to Monde Fatih Birol, director of the International Energy Agency (IEA), which on Thursday published its annual report on world energy prospects. For the time being, this ebb in prices is explained, according to him, mainly by “the mild weather”, as well as a “destruction of demand in Europe”. A context to which is added “the significant supply of liquefied natural gas [GNL] », as evidenced by the bottled presence of LNG carriers near European ports.
“Things can change very quickly”
Experts point out that prices on short-term markets are volatile both up and down. “Things can change very quickly if activity picks up in China and it starts to get colder”assures, for his part, the director of the Center for Research in Economics and Energy Law, Jacques Percebois, specifying that “individual consumers whose prices are indexed to wholesale prices could benefit from this reduction”.
Nevertheless, and this is a sign not to be underestimated, investors continue, on the futures markets, to anticipate fairly high electricity prices, around 400 to 500 euros per megawatt hour. Moreover, beyond these doubts for this winter, uncertainties remain for a little later, once stocks are exhausted and it will be necessary to think about replenishing them. “Barring an unexpected large-scale problem, a major destruction of infrastructure for example, Europe should not encounter major supply difficulties this winter”, rappelle Fatih Birol.
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