European gas prices fall to pre-Ukraine war levels – The Guardian

European gas prices have fallen to levels last seen before Russia launched its invasion Ukraine in February, after warmer weather across the continent eased shortage concerns.

Europe’s one-month gas futures contract fell to €76.78 per megawatt-hour on Wednesday, its lowest level in 10 months, before closing higher at €83.70, according to Refinitiv, a data company.

The invasion turbulent global energy markets and forced European countries, including industrial powerhouse Germany, to seek alternative suppliers to those who fund the Kremlin. Europe remained dependent on Russian gas even after annexing Crimea in 2014 and supporting separatists in eastern Ukraine.

On Tuesday, 83.2% of EU gas storage was filled, industry association data Gas Infrastructure Europe showed. The EU set a target in May to fill 80% of its gas storage capacity by early November in preparation for winter. It reached that goal in August and by mid-November it had peaked at over 95%.

Gas prices bounced further away from a 10-month low on Thursday, reaching €85.50 per megawatt-hour.

Europe still has several months of domestic heating demand ahead, and some industry bosses believe energy shortages could be a problem into next winter as well. However, traders also had to consider the effects of expected recessions in several major European economies, which could hurt energy demand.

Gas prices in the UK have also fallen from their peak earlier this year. The day-ahead gas price closed at 155p/therm on Wednesday, down from 200p/therm at the start of 2022 and over 500p/therm in August.

Europe’s response to the prospect of gas shortages also included campaigns to reduce energy consumption – a strategy adopted too late by the UK – and windfall taxes on energy companies to help raise revenues for governments, many of which have introduced costly subsidies to cushion the impact of high energy prices on households and consumers. Energy companies have made huge profits this year at the expense of businesses and households as prices rose, but costs remained virtually unchanged.

However, the US oil company ExxonMobil launched a legal battle against EU windfall tax plans on oil companies, according to filings of its German and Dutch subsidiaries with the European Court of Justice in Luxembourg. ExxonMobil argued that the windfall tax would be “counterproductive” because it would lead to lower investment in fossil fuel extraction, and that the EU did not have the legal jurisdiction to impose it.

ExxonMobil’s move has sparked anger among European politicians. A post on the Twitter account of Paolo Gentiloni, the EU’s economy commissioner, declared on Thursday: “Fairness and solidarity, even for corporate giants. #Exxon.”

Oil prices are significantly lower than they were before the start of the Russian invasion, and only marginally higher than at the start of 2022. Brent crude oil futures traded at $100 a barrel on February 28, but were at $81.84 on Thursday .

Oil prices fell 1.7% on Thursday. Prices had risen from 12-month lows in early December as traders hoped for increased demand from China after it eased coronavirus restrictions. However, it is believed that the number of Covid-19 infections in the country has skyrocketed, leading to the US requires travelers from China to show a negative test for the disease and dampening expectations for a rapid increase in oil demand.

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