The price of European natural gas falls to its lowest level in six months - financial expert explains background and effects.

The price of European natural gas falls to its lowest level in six months - financial expert explains background and effects.

According to a report by www.tagesschau.de, the price for European natural gas is currently as low as it was last July. The trend-setting futures contract TTF for delivery in one month on the Amsterdam stock exchange slipped below 26 euros per megawatt hour (MWh) and temporarily cost 25.82 euros.

Prices for European natural gas are currently at their lowest level in more than half a year. Since the beginning of the year, the raw material has become significantly cheaper despite numerous geopolitical crises. The price decline is explained, among other things, by the weak economy in the European Union, which is slowing demand for gas, including in Germany.

The recent attacks by Houthi rebels on important shipping routes in the Red Sea have not given the gas price a major boost. Raw materials experts assume that this will not affect supplies in Europe.

Another factor for the low gas price is the reduced gas consumption in industry, which in the last quarter of 2023 was 16 percent below the average consumption from 2018 to 2021. Consumption by households and businesses was also 16.7 percent lower. This is partly attributed to the above-average temperatures in recent years.

Based on these facts, it can be expected that the low gas price could provide relief for industry and consumers. At the same time, however, weak demand due to economic conditions in the European Union could have a long-term negative impact on gas producers and the entire energy market. However, it remains to be seen how the geopolitical situation and economic conditions will develop further.