European gas prices hit a 10-month trough due to milder weather this winter.

The prices of gas in European countries have fallen to the 10-month lowest level since the beginning of the Russia – Ukraine War due to current European warmer climate in this winter, rising gas reserves and enhancement of green energy usage.

Warmer weather patterns in European countries

Winter Season 2022/23 officially began on December 21st. This month’s weather pattern changed to a milder one after a vast portion of Europe had a meteorological winter that was initially cold. 

Recently, while Scandinavia experienced some nice winter days, the majority of Europe took a warm path. 

The trend is expected to get warmer this weekend as we celebrate the Christmas holidays. Most of the continent will experience far above average temperatures. Also, forecasts do not indicate that the cold season’s weather will change much at least until January starts.

Winter weather outside Europe

We have not seen a lot of recent winter weather reporting outside of the international news. A huge contrast between Asia and North America and Europe on the other side has been introduced by this month’s widespread circulation throughout the Northern Hemisphere. 

The lobe headed towards North America, where it unleashed the record Arctic outbreak that led to this weekend’s catastrophic winter storm Elliot in Canada and the US. precisely when millions of people travel over the holidays. However, the warmth has trapped Europe.

Gas demand and the storage of European nations

Due to this, Germany, the largest user on the continent, had the luxury of adding more gas to storage than it took out on Wednesday. 

The nation’s storage facilities were 87.3% full on Wednesday, according to statistics from Bundesnetzagentur, the national grid regulator, significantly higher than the 75.4% level that would be deemed alarming at this point in the winter.

As of December 28, gas storage facilities in the EU were 83.2% full, according to Gas Infrastructure Europe. Poland is 96.4% filled, Spain is 93.2% full, and Portugal is 98.2% full. With a 47.2% storage level, Latvia currently has the lowest level. 

The usage of wind power, which is increasingly being used to produce electricity instead of natural gas, also contributed to the price decline.

What has also contributed to gas price drop?

Before that, record-breaking temperatures and Moscow’s weaponization of the goods it exports to Europe pushed gas prices to surpass €300/MWh during the summer. 

The EU has put in place a number of policies, such as mandatory gas storage requirements and objectives for reducing use, in an effort to contain price increases.

The current storage level is around 10% higher than the average of the preceding five years and 30% higher than the same period last year, when storage levels in Europe were abnormally low.

Stocks have benefited from lower gas demand as well, with the region’s needs falling by nearly a quarter in November compared to the five-year average after falling by a similar amount in October.

Analysts caution that Europe will have challenges trying to replenish its gas supply in the coming year, when the volume of gas supplied from Russian pipelines will be significantly lower and the liquefied natural gas market, which the region has relied on this year, is still restricted.

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