European gas prices dive further
The front-month TTF gas contract dropped further on January 4, closing in at only €65/MWh ($735/'000 m3), as Europe continues enjoying unseasonably warm weather.
The contract is now trading at its lowest level since mid-January, but nevertheless is still priced more than three times higher than it was two years ago, before the global energy crisis emerged. Besides weather conditions, another factor has been reduced industrial consumption.
Gas storage inventories in the EU and the UK are at their second-highest level for the time of year in the last decade, and look set to end the winter at a record high. EU gas storage currently stands at 83.4% capacity, with a number of countries including Germany, which hosts the biggest storage capacity in the bloc, now taking advantage of comparatively low prices to refill its stocks.
Despite a drastic reduction in Russian pipeline gas supply over the past year, Europe has managed to replace a significant share of the lost volumes with LNG. But the other key factor has been demand destruction caused by high prices.