Top managers of the largest commodity market operators have acknowledged that prices for short-term gas contracts in Europe may briefly become negative this summer, according to Bloomberg citing participants of the annual E-World energy fair in Essen, Germany. Gas prices could go below zero if weak demand fails to catch up with the growing supply surplus.
This occurrence, where gas producers essentially pay consumers to take gas off their hands, is becoming increasingly likely as prices have already approached pre-crisis levels. This week, gas prices on the European exchange fell below $300 per thousand cubic meters for the first time in two years. On May 26 trading, the cost of June futures on the TTF hub in the Netherlands decreased by 0.3% to €25.38 per 1 MWh, or around $286 per thousand cubic meters considering the current exchange rate on the Forex market.
On certain regional gas markets in Europe, prices may turn negative during hours or days with high renewable energy generation, said Peder Bjørland, Vice President of Gas Trading and Optimization at Norwegian oil company Equinor, in an interview with the agency. However, he warned that negative prices are still a long way off and “a lot can happen along the way.”
Dierd Varga, CEO of Swiss trading firm MET International, also anticipates a drop in gas prices in Europe below €10 per 1 MWh (approximately $113 per thousand cubic meters).
“In the near future, within a few days, if gas storage facilities become full, we might witness prices below €10,”
Нe said, emphasizing that the cause would be a “bottleneck” in terms of storage capacity.
