Thanks to a warm winter and support from new suppliers, European natural gas prices have dropped below €50 per megawatt hour and hit the lowest level in 18 months.
On Friday, the benchmark TTF contract fell 5% to a low of 49 euros amid optimism that Europe will avoid shortages this winter and next. While still above historical averages of €10 to €30, prices have plunged 85% from highs reached last summer, when Russia President Vladimir Putin sought to weaponise energy byto Europe, which had imposed sanctions on Moscow for its invasion of Ukraine.
At the current level, natural gas prices are equivalent to $85 per barrel, nearly on par with Brent crude oil at around $83.third warmestMeanwhile, Europe also found alternate supplies, including from the US and Middle East. In November, Germany signed aBut further downside to gas prices may be limited as demand looks to pick up. Prices are now low enough that Europe may go back to using gas for power generation, after turning to cheaper coal last year.
Russia has signaled hopes to redirect gas sales to China as state-owned energy giant Gazprom reportedly lostBut others are also vying to supply China. Qatar signed a 27-year contract it has signed with China to supply 4 million tons of gas per year.