Gas prices fall again; Dutch gas storage levels well below average

The gas price has dropped again in recent weeks and is now back around the low level of April 2024. This is good news for the energy bill, but makes filling gas storage less attractive this winter. As a result, Dutch reserves are decreasing rapidly. As long as LNG ships continue to dock, this is not an urgent issue. However, in a world full of geopolitical tensions, the research institute TNO raises the question of whether we should not leave security of supply too much to the market. After a decline, where the price on the TTF futures market fell to just over €26 per MWh in mid-December, the gas price rose again after the first week of January to more than €39 on January 30. However, since then the gas price has been declining in fits and starts and at the time of writing (Tuesday afternoon, February 17) stands at €30.53 per MWh. Thus, the gas price is back at the low level of April 2024. The relatively low gas price makes refilling gas storage this winter less attractive. Companies are responsible for storage, but storing gas is not lucrative if prices in winter are not higher than in summer. LNG supply is relatively abundant, especially from the US. As a result Dutch gas reserves are starting to run quite low. They are only 14.9% full (compared with 33.5% across the EU) according to information from Gas Infrastructure Europe. Although that is very low – a year ago the filling rate was double at 30.5% – caretaker minister for Climate and Green Growth Sophie Hermans is not worried. During the parliamentary debate on the budget for Climate and Green Growth, she said last week: “The storages are not the only source from which we are drawing our gas these days, these weeks. They are storages that we use in winter to meet the extra demand when it's cold, but we also still have the import and of course our own production. The import of LNG continues. Those ships keep coming. That relatively low price is indeed an important factor in that. The market continues to do its work.” Under normal conditions, there is also no problem according to Rene Peters, director of gas technology at the research institute TNO. “We are well connected with our neighboring countries, the United Kingdom, Germany, Belgium, and import gas from Norway. Moreover, there is substantial import capacity for LNG, particularly from the US and Qatar,” he writes on LinkedIn. But we live in an uncertain world: “What if those flows dry up due to sanctions or war, with the Strait of Hormuz being closed? Perhaps we should seriously consider a strategic or emergency reserve for gas just like we have for oil?” TNO also wonders whether it is wise for NAM to close all gas wells and remove all above-ground facilities. TNO advocates keeping part of the Groningen field available as an emergency reserve. The Netherlands is 70% dependent on gas imports and gas production from small fields in the North Sea (30% of our usage) is rapidly declining, Peters points out. The EU imports more than 100 billion cubic meters from Norway through three pipelines and is 60% dependent on the US for LNG import. Under unchanged policy, that will rise to 80% by 2030, according to Peters. Minister Hermans says she is closely monitoring the filling rate. She indicates that you must balance security of supply and affordability. “That is why it is always a search for the balance between what role you take as a government and what you leave to the market when it comes to filling gas storages.” Oil price seeks balance between geopolitical tensions and overproduction The oil price remains relatively stable while awaiting discussions between the US and Iran regarding the Iranian nuclear program. At the time of writing, crude Brent oil costs $68.61 per barrel. On December 16, it was still $58.92, an increase of more than 16% in two months. Concerns about geopolitical developments are pushing the oil price up. Overproduction still plays a background role, keeping the price in check. In its latest report, the International Energy Agency (IEA) slightly lowered its expectation for growth in global oil demand for 2026 to 850,000 barrels per day. Economic uncertainties and higher oil prices are depressing consumption, according to the IEA. Meanwhile, supply continues to exceed demand, while Opec countries, according to various media, are considering further increasing their production from April. In the first quarter of this year, Opec+ kept oil production steady. The price rose slightly on Monday as Iran held a military exercise in the Strait of Hormuz. That seems to be a warning directed at the US. Iran has previously threatened to block the strait if the US attacks Iran. A blockade would affect global trade in oil and gas. A third of the world's traded oil and a fifth of liquefied natural gas (mainly from Qatar) passes through this route. Diesel price For diesel, on February 17 €132.61 per 100 liters was paid for 4,000 liters (LTO member price). Electricity On the European Power Exchange (Epex Spot), the daily average for the past week was between €85.07 and €102.50 per MWh.