European gas prices near this year's high, exceeding €33 per MWh

The wholesale natural gas price for the European market, for delivery next month, exceeded 33 euros per megawatt-hour (MWh) today and is approaching this year's high. Analysts see the main cause as prolonged maintenance and related outages at processing facilities in Norway. However, gas prices are still significantly lower than during the same period last year.

Shortly after 10:00 CEST, the benchmark futures contract for gas delivery in June was up by more than two percent at 33.50 euros per megawatt-hour at the Title Transfer Facility (TTF), a virtual trading hub in the Netherlands. Gas prices were above 34 euros at the start of January, while their lowest level this year was in February, when they fell to around 23 euros. By contrast, a year ago they were around 48 euros/MWh. TTF prices are a benchmark for the European market.

Production at the Troll field in the Norwegian sector of the North Sea and operations at the Kollsnes processing plant near Bergen in western Norway are currently offline. Maintenance has reduced gas deliveries, and investors are now concerned that a return to normal will take longer than originally expected, the Trading Economics website reported. Norway is a key gas producer in Europe.

Pipeline gas deliveries to Europe fell to 178.9 million cubic metres per day on Tuesday, their lowest level since last September. However, deliveries are expected to gradually return to normal by the end of May. Meanwhile, warmer weather forecast by meteorologists through the end of May is dampening demand for gas. As a result, among other factors, European gas storage facilities are more than 67 percent full.

Wholesale gas prices began rising more sharply in autumn 2021, before the war in Ukraine. Some economists attribute this to the European Green Deal, under which the European Union set a timetable for a rapid shift away from fossil fuels. In summer 2022, after the start of the war in Ukraine and as the EU began rejecting Russian gas, the commodity's price at TTF briefly exceeded 300 euros per megawatt-hour.