Gas prices in Europe are falling sharply due to weak demand amid continuing quarantine COVID-19 restrictions, as well as an increase in energy supplies from renewable sources, Radio Liberty reported.
The European market is crowded; gas storage tanks are coming to end. Some of the traders surveyed by Reuters believe that the cost of European gas contracts by May 30–31 will drop to zero or even go negative.
In the European reference gas market, the Dutch TTF hub, the price of the contract for delivery the next day on May 22 fell by 20 percent, to a new historic low of € 2.50 per megawatt-hour — less than $ 26.4 per thousand cubic meters, RBC calculated.
As one of the traders told Reuters if the supply remains as high until the storage tanks are full, we can see negative prices because there are no signs of an improvement in the demand situation.
Gas suppliers are not going to reduce production - the cost of its recovery may be too high, The Bell reported. As a result, according to forecasts by Refinitiv analysts, available gas storages can be filled by the end of July.
To reduce the damage from falling prices, Gazprom began to reduce supplies to Europe. In January - April 2020, they have already decreased by 21.4 percent compared to the same period last year. But if the supply of liquefied natural gas from Qatar continues to increase, the reduction will not stop the price decrease - the situation will be the same as in the oil market before the April OPEC + deal, Thierry Bros, professor at the Paris Institute of SciencesPo, told RBC.