The “holiday” for Gazprom on the European gas market, where prices soared by hundreds of percent in winter and reached 2-year highs, has come to an end.
After the wave of the Arctic cold receded, and the air in Germany, France and Poland warmed up to 10-17 degrees Celsius in the spring, quotations at European gas hubs plummeted.
In a little more than a month on the Dutch TTF site, gas prices fell by 40%: contracts for delivery on Tuesday, February 23, were concluded at $ 199 per thousand cubic meters against $ 335 in mid-January.
Gas prices have collapsed even more rapidly in Asia, where in early winter the Platts JKM spot index reached $ 32.5 per million BTU (British thermal units), or $ 1,150 per thousand cubic meters, and individual deals were concluded at $ 1,400.
Now gas for delivery to Asia in March is being sold at $ 6.9 per million BTU, and in April at $ 6.4, sources familiar with the terms of the latest deals told Reuters. Moreover, prices continue to decline: over the past week, April contracts became cheaper by 20 cents, they say. Since the beginning of February, gas at the JKM site has fallen in price by $ 2, or 22%.
The end of weather anomalies in the Northern Hemisphere – with snowfalls in Istanbul, freezing temperatures in Spain and renewed half-century temperature minimums in India and China – has led to the fact that gas prices in Asia and Europe have almost equalized, analysts at Independent Commodity Intelligence Services say.
In January, selling gas to Asia was 1.5 times more profitable than to the EU: the difference in average price reached $ 3.3 per million BTU. As a result, LNG suppliers practically left the European market: imports contracted from 10 to 4.4 billion cubic meters.
But now the Asian premium is 20 cents per million BTU, which means that LPG could again flood into the European market.
So far, however, this is hindered by the problems of American suppliers, who, due to unprecedented frosts, were forced to cut shipments 5 times. Volumes are now recovering, but exports still fall short of nearly 30% to their January peaks.
“A more radical drop in gas prices in both Europe and Asia should be expected, first of all, with the end of the heating season. For the majority of consumers in North-East Asia, such a “cut-off” is March, for North-West and Central Europe – April “, – warn analysts at the Skolkovo Energy Center.
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