Europe's risk of winter energy nightmare recedes for now
Some good news for Europeans, heading into winter: Natural gas prices are plunging, as warm weather and growing stockpiles have massively alleviated pressure.
Why it matters: It suggests the nightmare scenario of winter without heat for millions of Europeans — resulting from the cutoff of Russian energy to the West — has been averted, for now.
State of play: Benchmark natural gas futures prices in Europe, priced on the Dutch Title Transfer Facility (commonly referred to as TTF) closed below €100 per megawatt hour Wednesday.
- Prices are down nearly 50% in just the last month and more than 70% from their August peak.
The abrupt drop is a result of a few things ...
- European stockpiling of natural gas has pushed storage levels to over 90% of capacity.
- Warm weather on the continent has cut heating needs.
- European officials continue to move toward price caps on the TTF contract.
What they're saying: "Europe has enough gas stored to survive this winter unless it gets very, very cold," wrote analysts with research firm Rystad Energy in a note Wednesday.
- "But the continent is not out of the woods yet — with Russian flows continuing to decline, winter 2023 will be even tougher."