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Analysis Energy

Europe imports more gas from Russia than the US

June 18, 2024 - Matthijs Bremer

The gas price has remained fairly stable this past week, but the electricity price was unstable and on the low side. A continuous supply of gas to Europe prevented major fluctuations in the gas price. At the same time, strong winds led to cheap electricity.

The price of gas has slightly increased this week. On Tuesday, June 11, gas was traded at €34.29 per megawatt-hour. On June 13, the price reached the highest point of the week at €35.72. On Monday, June 17, the price dropped again to €34.86.

The gas market has been relatively stable in the past week. This is the result of a constant gas supply, following weeks of issues with Norwegian exports. This is good news because so far the filling of the reserves has not been favorable. Analysts refer to it as an unusually slow start to the filling season. Since March 31, only 2.1 terawatt-hours of gas have been stored per day. The average speed of refilling the reserves has been around 2.9 terawatt-hours per day since 2012. Even before the Ukraine war, such a filling speed was unusual. It has only happened once in the last ten years that the gas reserves were refilled so slowly. However, it is worth noting that we exited the winter with very full reserves. Therefore, as of the last available measurement on June 9, the reserves were still 17 percentage points more filled than the ten-year average. On the other hand, the filling rate on March 31 was 22 percentage points higher.

The slow pace of filling the reserves is mainly due to the weak American supply of LNG due to maintenance at the Freeport LNG terminal. This led to the lowest US export of liquefied gas since August 2022. Interestingly, the supply from the United States fell below Russian gas exports, which still account for about 15% of European imports.

Favorable Weather
Currently, the gas price is under some pressure. A favorable temperature is the determining factor. In recent weeks, it has been rather cold in Northern European countries, leading to heating being used in various places, including Scandinavian countries. The weather forecasts are now more favorable. It is not as cold anywhere in Europe, but at the same time, temperatures in large parts of Europe are not high enough to create a significant additional demand for gas to generate electricity for air conditioning.

Wind Dominates the Electricity Market
Meanwhile, the electricity price fluctuated significantly this week. On Tuesday, June 11, electricity was traded at €61.19 per megawatt-hour. Remarkably, the lowest price of the week was reached not on Sunday, June 16, but on Saturday, June 15. On that day, electricity was traded at €17.69 per megawatt-hour. The highest price was recorded on Monday, June 17, when the price rose to €87.66.

The electricity price remains relatively favorable, as wind, in addition to solar energy, also has a significant share in the energy mix. Normally, the share of wind energy decreases significantly in spring and summer, while solar energy increases. However, this year, it has remained windy, keeping the energy prices consistently low, and this week was no exception. This week, a total of 32.7% of all electricity was generated by solar panels, while wind turbines accounted for 31.5%. As a result, 64.2% of all electricity was generated by virtually free sources.

This also led to an atypical price pattern. Especially on Monday, Saturday, and Sunday, the strong winds led to lower prices. During the weekend, not only was the output from solar panels high, but the wind turbines also did a lot of work. Particularly on Saturday, the wind was strong. This had the advantage that the energy was generated more consistently throughout the day, keeping the price consistently low and reducing the base price. On Sunday, the wind was slightly weaker, but there was slightly more solar energy. As a result, the generation from renewable sources was less efficient, and the price increased.

Matthijs Bremer

Matthijs Bremer is a market specialist in pork, beef, and poultry meat at DCA Market Intelligence. He also monitors the protein transition, keeping an eye on developments in cultured meat and meat substitutes.
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