The price of gas in Europe will normalise and drop below $300 per 1,000 cubic metres by the end of the heating season
Jerrymusa.com reports that Amid record reserves in storage facilities and the commissioning of new LNG capacities in the US in 2024, according to Finam analyst Sergey Kaufman.
The EU gas reserve is almost full
There are no prerequisites for price growth compared with current levels, the expert noted.
In particular, gas reserves in the EU remain record high, and considering persisting saving policies, the lack of supply disruptions, and neutral winter weather so far, the EU’s underground storage facilities may be 50–55% full by the end of the heating season.
This is also close to record levels, and it may create a good basis for the EU to accumulate reserves before the heating season of 2024–2025.
Demand-supply balance remains low
That said, the demand-supply balance on the global gas market remains narrow, though starting in the second half of 2024, the commissioning of new LNG capacities is expected to start.
“Projects with a total capacity of around 50 billion cubic metres per year may be commissioned next year. The US will account for the majority of new capacities, which will make the passage of the next heating season even easier for the EU.
With those factors coupled, we expect a decline in gas prices in the EU below $300 per 1,000 cubic metres by the end of the heating season, which would mean their full normalisation,” Kaufman said.
How price will stabilize
The decline in gas prices, together with the growth of supply, creates prerequisites for a moderate recovery of demand from the side of European industry, the analyst added.
“However, it may still be at least 10% lower in 2024 than its average during the pre-crisis period of 2017–2021,” he said.