Russian President Vladimir Putin.
MIKHAIL KLIMENTYEV/RIA NOVOSTI/AFP via Getty Images
Alternative suppliers and a warm winter have brought European gas prices below 50 euros per megawatt hour.
That marks an 85% drop from the price peak last year, when Russia cut gas exports and sparked a price spike.
Natural gas prices are now equivalent to $85 per barrel, nearly on par with Brent crude oil at around $83.
Thanks to a warm winter and support from new suppliers, European natural gas prices have dropped below 50 euros per megawatt hour and hit the lowest level in 18 months.
On Friday, the benchmark TTF contract fell 5% to a low of 49 euros amid optimism that Europe will avoid shortages this winter and next.
While still above historical averages of 10 to 30 euros, prices have plunged 85% from highs reached last summer, when Russia President Vladimir Putin sought to weaponize energy by cutting off gas supplies to Europe, which had imposed sanctions on Moscow for its invasion of Ukraine.
At the current level, natural gas prices are equivalent to $85 per barrel, nearly on par with Brent crude oil at around $83.
The worst of the energy crisis was dampened by a mild winter, in which Europe experienced its third warmest January. Europe’s gas storage is at 65% of capacity with winter now more than halfway over.
Meanwhile, Europe also found alternate supplies, including from the US and Middle East. In November, Germany signed a 15-year contract with Qatar, a major liquefied natural gas exporter.
But further downside to gas prices may be limited as demand looks to pick up. Prices are now low enough that Europe may go back to using gas for power generation, after turning to cheaper coal last year.
Russia has signaled hopes to redirect gas sales to China as state-owned energy giant Gazprom reportedly lost $3 billion in overseas revenue last month compared to a year ago.
But others are also vying to supply China. Qatar signed a 27-year contract it has signed with China to supply 4 million tons of gas per year.