Fewer reserves

Automatically stored draft

As announced, Ukraine completely stopped the transit of natural gas from Russia on New Year's morning.

(Bild: AFP/Tomas Benedikovic)

Even before Ukraine stopped the transit of Russian natural gas to Europe, the price of gas had risen on the major gas trading exchanges. Before the Christmas holidays, natural gas had cost less than 46 euros per megawatt hour, but shortly before the turn of the year the price rose to just over 50 euros.

On Thursday, the price of the benchmark TTF futures contract for delivery in a month's time on the Amsterdam exchange rose at times to 51 euros. In the course of trading, however, the price fell back to EUR 49.54 per megawatt hour.

The current day-ahead gas price on the Austrian gas exchange CEGH is just over EUR 50, the same level as at the end of December. The suspension of gas transit by Ukraine was expected and had therefore already been largely priced in.

Gas transit suspended on New Year's Day
As announced, transit has been completely suspended since New Year's morning. Ukraine had not extended a transit contract in order to cut Russia off from further income, which the Kremlin also uses to finance its war against the neighboring country.

Last June, Russian gas still accounted for 18 percent of EU imports, according to a report by the EU Commission. Before the start of the Russian attack, this figure was 45 percent in 2021. However, following the transit ban through Ukraine, Russian gas also reaches the EU by sea in the form of liquefied natural gas (LNG).

Fewer gas reserves in the winter months
Analysts pointed to the decline in gas reserves in the winter months. With the loss of gas supplies from Russia, there is a risk that replenishing stocks could become more expensive, said commodities expert Lohmann Rasmussen from Global Risk Management, a service provider that deals with risk management in the energy sector.

According to the energy ministry, Austria's gas storage facilities were 78 percent full on December 31 - on the same day a year ago they were 93 percent full.

Natural gas twice as expensive as before the war in Ukraine
Since mid-December, the price of natural gas has been trending upwards and has risen by around 26% in this period. However, the price is still well below the level it reached in the early phase of the Ukraine war at more than 300 euros. Compared to the price level before the war in Ukraine, however, the price of gas has roughly doubled.