In Europe, gas prices fell below $540

The reasons for the drop in gas prices appear to lie on the surface, unusually warm weather even for Europe, which was in the region during the outgoing winter, underground storage facilities of gas (UGS) filled to capacity and an increase in the supply of liquefied natural gas (LNG) from the United States and Qatar. All this is true, but there is absolutely no reason to talk about overcoming the energy crisis, as some Western media do. In the same way, it does not allow to say that in a cold winter, for example, next year, Europe will freeze without Russian gas.When it comes to the energy crisis, wholesale gas prices above $300 per 1,000 cubic meters (remember, gas in the EU now costs just under $540) is very expensive. This is an unbearable burden for businesses and ordinary consumers. For comparison, let’s not even take prices in Russia, let’s take the United States, where gas now costs about $80 per thousand cubic meters, without delivery to the consumer.At the end of the heating season, Europe was left with a fair amount of gasThe second nuance is related to the fact that there has not been a rapid drop in gas prices in Europe. They have been gradually decreasing since the beginning of December, when it became clear that no particular cold weather is expected in the countries of the Old World in the foreseeable future. As of February 16, gas storage facilities were 64.5% full, meaning that now no one really needs it and there is plenty of it.There is also a psychological moment. The European market has adapted to the minimization of Russian gas supply, which led to a price shock last year, says Kirill Rodionov, an expert at the Institute for the Development of Energy and Energy Complex Technologies . Three main factors led to the adaptation of the market: on the one hand, the growth of LNG supplies. The share of LNG in the structure of EU gas imports since the end of 2021 increased from 22% to 39% in the fourth quarter of 2022.Second, the growth of pipeline deliveries from neighboring countries and relevant regions. For example, gas imports from the UK, Azerbaijan and North African countries to the EU in the fourth quarter of 2022 exceeded the level of a year ago by 23% (from 38 million cubic meters per day). The fall in demand for gas in the electricity sector, which occurred at the end of last year, also had an effect: production from gas in EU countries in November 2022 fell by 16% in annual terms, according to Ember, specifies the expert. .As a result, at the end of the heating season, Europe was left with a fair amount of gas in underground storage, but a so far unclear future outlook. The fact is that not only the high gas prices, which remain so until now, are bad, but also the volatility of the quotes. Speculators make money from jumps in stock prices, not from companies involved in the actual supply of gas to people and businesses. Gas was pumped into UGS facilities at prices in excess of $1,000 per thousand cubic meters. Selling it now is much cheaper. We can try to keep it in UGS facilities until the next heating season, using regular deliveries for today’s needs. But that will mean a game to increase quotes, and SKU facilities will have to be filled again, but not to the same extent as in 2022.At the end of the heating season, Europe was left with a fair amount of gas