Gas prices in Europe fell by over 4% to $570 per thousand cubic meters at the beginning of the first trading day of the week.

March (nearest) futures on the TTF index (the largest hub in Europe) opened trading at $573.9 per thousand cubic meters. The dynamics of quotations are based on the settlement price of the previous trading day (Friday) - $596.7 per thousand cubic meters.

Gas prices in Europe have been falling below $600 per thousand cubic meters since January 17, which has not happened on the market for the last sixteen months. The main reason for this is warm weather and strong winds, which have increased power output from wind farms. All this is combined with sufficient levels of gas reserves in European underground gas storage facilities.

And yet all these positive aspects do not cancel out the fact that gas quotations are currently more than twice as high as they are used to in the European region.

And experts are in no hurry to cheer at this positive news. For example, the European Commission sees risks of gas shortages in the European Union next winter. And, of course, all current geopolitical crises do not promise to come to naught so soon either. And that is why the EC admits that gas prices next winter may well soar to new peaks on the charts.

According to the document, by the end of January this year, the gas benchmark of TTF, Europe's largest gas hub, fell by about six times compared to August, to about 55 Euros per MWh, or about 569 Euros per thousand cubic meters.

According to futures contracts, TTF gas prices will remain in a narrow range of EUR 55-70 per MWh (i.e. around EUR 569-724 per thousand cubic meters) until the end of 2024. According to the EC, this rate is on average 57% and 42% lower than the assumptions made by the European Commission in its previous autumn forecasts for 2023 and 2024, respectively.

It is also noted that a stronger demand recovery in China could increase global LNG demand, which would create more problems for Europeans. It's simple - filling the storage facilities in the summer of 2023 will cost Europeans much more than it cost in 2022.

Gas prices in Europe increased significantly back in the spring of 2021, when the TTF gas quotes fluctuated within the range of $250 - 300 per thousand cubic meters. By the end of the summer they were already over $600, and in the fall they were $1000. In early spring, due to the probable ban on Russian energy imports, a thousand cubic meters of gas in Europe was priced at an unthinkable $3892.