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European natural gas prices drop back to pre-Ukraine war level

European gas prices have dropped back to levels seen before the Ukraine war began in February, as fears of a gas crisis this winter ease.

The month-ahead European gas future contract dropped as low as €76.78 per megawatt hour yesterday — its lowest level in 10 months, data from Refinitiv shows.

Prices have dropped thanks to warmer-than-normal temperatures this winter, which have limited demand for gas, after the European Union successfully filled reserves to a peak of almost 96% in November.

Consumption reduction targets have also helped to limit demand, with the EU aiming to cut its gas consumption by 15%.

Earlier this week, 83.2% of EU gas storage was filled, data from industry body Gas Infrastructure Europe shows, still above the target of 80% set for the start of November.

Traders are confident that inventories will end winter at a very comfortable level with a very low risk of falling to critically low levels, says John Kemp, energy market analyst at Reuters.

UK gas prices have also dropped back from their highs earlier this year. The day-ahead gas price closed at 155p per therm yesterday, compared with 200p/therm at the start of 2022, and over 500p/therm in August.