Dutch benchmark wholesale gas falls to two-year low

The Dutch wholesale natural gas price for the month ahead fell to a two-year low on Friday morning, which could offer some relief to consumers and some businesses who have been paying high energy bills over the past year.

The Dutch June gas price, a benchmark for the European gas market, fell to 24.90 euros ($27.41) per megawatt hour (MWh) by 0729 GMT, the lowest since May 27, 2021.

The contract reached a peak of around 340 euros/MWh in August 2022 amid the European energy crisis and as Russian gas pipeline supplies dwindled.

The crisis caused gas and power prices to spike last year, burdening consumers and some businesses with very high energy bills and causing some industries to curtail production.

European wholesale gas prices have been falling this year because of a milder-than-normal winter, gas consumption reduction measures and healthy gas storage levels and supplies.

Analysts at ANZ said Europe has managed to escape severe shortages in gas amid mild temperatures and plentiful liquefied natural gas supply.

European gas consumption between August 2022 and March 2023 was 17% lower than the average of the same period over the previous five years, they said.

Although they estimate that Europe will get through another winter without any significant disruptions to energy supply, the ANZ analysts added a note of caution.

“We estimate Germany, and the broader region, could experience gas shortages next winter if demand is not reduced by another 15%,” they said.

News on Thursday that Germany’s economy, Europe’s largest, slipped into recession also added to a further slump in natural gas prices, traders said.

Declines in wholesale energy prices often take a few months to translate into lower retail energy bills.

Benchmark wholesale British gas prices have almost halved since the beginning of the year, enabling the country’s energy market regulator Ofgem to lower its cap on household energy bills by almost 40% from July.

However, the price drop for most British households will be around 17% as they have been protected by a government guarantee since October to keep the average annual cost of energy at 2,500 pounds ($3,155) a year to help with a cost-of-living squeeze.