During the Friday session, prices of EU natural gas turned low once again due to lower demand. According to experts, the weather is still warm across Europe, which has led to lower demand for natural gas. This also presents an opportunity for European countries to replenish their natural gas reserves.
TTF contract, which is the benchmark index for Northwest Europe, was last seen at 85.10, which is around 7.4% down. Earlier, the rate of the contract even fell to 82.86 per MWh as well.
However, the natural gas in the EU has fallen a lot more dramatically during the last few weeks. For the most part, the market players are very relaxed with the current outlook for supply and demand. As a result, the contracts for January are dropped by more than 40% already.
All the other elements are just minor, but the most important of them all is the warm weather, without any doubt. As December started, there were fears that the EU countries would consume their reserves at a much faster pace. In turn, this raised fears that the gas reserves will fall dangerously low as we approach the end of the winter.
But just this week, the temperature has become warmer and will remain so for the rest of the year. As a result, the consumption of natural gas has also dropped significantly, which has led to lower prices across the board.
Germany is the biggest consumer of natural gas on the continent and has taken advantage of this situation to add more gas into its reserves. According to data, the storage facilities of Germany were around 87.3% which is very close to being full. Earlier, these levels were around 75.4% which tells us that Germany has significantly increased its natural gas reserves.
A closer look at the data also reveals that Germany has also benefited by adopting a strategy of a more disciplined approach towards gas consumption.