OREANDA-NEWS  The European Commission (EC) does not rule out a gas shortage in the EU in the winter of 2024, and also predicts a possible increase in gas prices, as it was last year. This is stated in the EC economic forecast.

Wholesale gas prices in Europe are now significantly below their level until February 2022, but the risks of growth in the coming months and a shortage of supplies in the winter of 2023-2024 remain. At the end of January, the price of gas at the TTF site dropped to €55/MWh (the peak in August was above €340/MW • h), follows from the EC forecast.

According to futures contracts, gas prices on the Dutch TTF site should remain in the range of €55-70/MWh, which is on average 57% and 42% lower than the assumptions of the autumn forecast for 2023 and 2024. Nevertheless, gas prices are still more than three times higher than in 2019, the EC notes.

"Moreover, in conditions of high volatility against the background of ongoing geopolitical tensions, a sharp price increase similar to the one that occurred in 2022 cannot be ruled out," the document says.

The risks of a gas shortage in the winter of 2023-2024 cannot yet be excluded, the EC notes. Domestic demand may turn out to be stronger than predicted if the recent decline in wholesale gas prices affects consumer prices and consumption turns out to be more stable, and the recovery in demand in China may increase external demand more than expected, the forecast suggests.

After the outbreak of hostilities, Russia gradually reduced gas flows to Europe. Gas prices in 2023 were stabilized by warm winter weather, which made it possible to preserve gas reserves in underground storage facilities. In January, the price at the TTF hub was €63 for 1 MWh versus €118 for 1 MWh in December. On February 8, the March futures cost €53.3 per 1 MWh.