Gas prices plunge as Europe tops up supplies ahead of winter
Gas prices continued to plummet across UK and European benchmarks, reflecting the continent’s successful scramble for reserves ahead of winter.
The UK Natural Gas Futures benchmark dropped steeply today, falling 15.2 per cent to £2.43 per therm – well below its record levels posted only a month ago – while the Dutch TTF Futures benchmark slipped 6.7 per cent.
This follows City forecasters predicting tumbling prices could knock £60bn off the costs of the support packages for households and businesses – currently estimated at a combined total north of £150bn.
Prices have eased 50 per cent from record highs last month, with Europe managing to successfully top off supplies to ease fears of supply shortages, while Russia has not escalated the energy crisis since it cut off flows via the Nord Stream 1 pipeline last month.
UK benefits from Europe’s supply scramble
UK gas prices closely track prices in continental Europe – with the country reliant on inter-connectors to buy and sell power – and on Norway to meet half its gas needs.
Earlier this year, the National Grid’s electricity system operator had forecast the country would stave off supply shortages this winter, however this was based on further supplies being available from Europe and overseas vendors.
Across the European Union (EU), gas storage levels now average 87.61 per cent according to AGSI+, while measures to contain energy usage have also limited demand alongside recession fears.
The bloc has topped up supplies with huge boosts in liquefied natural gas (LNG), including record influxes of US supplies, alongside further boosts from the Gulf states.
Most recently, German energy giant RWE signed a deal with Abu Dhabi National Oil Company (ADNOC) to deliver LNG to the country by the end of December.
Deutsche Bank has predicted that if prices were to halve from current levels, they would drop below the £2,500 Energy Price Guarantee brought in by the Government to protect households spiralling bills.
Rival investment group Goldman Sachs has projected that prices in Europe will fall from above €200 per megawatt hour earlier this month to below €100 by the first quarter of 2023 after the storage boost.