Will the winter be less harsh than expected? A few weeks after the first frost, the tension in the gas market falls. Despite threats to close the Russian tap, the price on the wholesale market started to fall again after the peak reached at the end of August.
In delivery contracts for 2023, the price of natural gas has fallen from €297 per MWh to less than €200 in recent days. A price that is still high when you understand it at 85 euros a year ago but now it seems to be going down.
This is how the Goldman Sachs bank estimates it on Tuesday, which in a note ensures that European countries will be able to withstand Russia’s gas cuts this winter. The analyst said supply issues may have been “successfully resolved” and now anticipates prices could more than halve this winter.
While at the beginning of September Goldman Sachs expected a price of around 213 euros per MWh for the winter, its new forecast points to a price below 100 euros for the first quarter of 2023.
As Russia’s Gazprom has cut off supplies to Europe in recent months, European countries have rushed to fill up their storage facilities, driving up gas prices.
larger stocks
A run that paid off, however, as Goldman Sachs analysts now expect storage facilities to be 90% full on average by the end of October, more than the 80% initially forecast by EU countries.
What to spend the whole winter if the latter is not too extreme in terms of weather. The US bank expects inventories to remain more than 20% full by the end of March next year.
Although Russia only accounts for 9% of the continent’s gas supply, the EU has reportedly given up imposing a cap on the gas price of Vladimir Putin’s country.
If this drop in the price of gas is confirmed, it could in turn lead to that of electricity. The price of the latter is the result of a complex calculation that takes into account not the real cost of production but the marginal cost of the last MWh produced in the network. However, with reduced electricity production capacities and strong demand, this marginal cost of the last MWh will be fixed by the production of gas-fired power plants. Therefore, a fall in the latter would automatically lead to an equivalent fall in the electricity market.
Source: BFM TV
