European gas prices swing back to pre-war level
European gas derivatives have dropped to their lowest level since before Moscow launched its invasion of Ukraine, as a result of mild weather, ample LNG supply and a steep reduction in demand.
The February TTF gas contract settled at €77/MWh ($864/'000 m3) on January 2 – the lowest level since February 21, 2022. By GMT on January 3, the price had fallen further, to €76/MWh.
The UK NBP front-month contract dropped to £1.86/therm ($783/'000 m3) on January 2, and was trading at £1.79/therm as of GMT on January 3. Trading was subdued as a result of a holiday in the UK.
Bruegel estimated in early December that year-to-date EU gas demand had dropped by 11% versus the average for the 2019-2021 period. Despite Russia almost halving its gas exports to non-CIS last year, the drop in demand, mild winter temperatures and increased LNG imports mean spot gas prices are now trading at the same level as they were before Russia began its war in Ukraine and subsequently cut supply to Europe.