Natural gas prices in the EU fell this week to levels not seen since before the start of Russia’s military operation in Ukraine, data from the London Intercontinental Exchange (ICE) shows.
The costs of front-month natural gas futures on the TTF hub in the Netherlands plunged in recent weeks to below €77 ($81.91) per megawatt hour (MWh) in household terms, a level not seen since February. They were trading at around €81.5 ($86.73) on Thursday morning.
At their peak in August, European gas prices topped €345 ($367) MWh, sending household energy bills soaring and fueling a cost-of-living crisis across much of the continent.
The current decline in prices is attributed to several factors, including unseasonably warm winter weather in much of northwestern Europe, which has helped reduce demand for heating.
EU countries agreed last week to set an emergency cap on wholesale gas prices at €180 ($191) per megawatt-hour, which would be triggered if gas futures trade at a higher level for three consecutive days. The measure will take effect on February 15 and is aimed at protecting consumers from gas price hikes.
In November, Goldman Sachs predicted a sharp drop in European gas prices in the coming months due to a stabilizing situation with storage levels.
However, despite the current decline, gas prices remain several times higher than the long-term average. Prior to spiking to historic highs this year on concerns over Russian energy supplies, TTF gas spot prices were trading in a €10-25 MWh range in the 2017-2019 period. In 2020, the market was hit by Covid-induced demand shock, followed by the exponential price rise this summer.
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