November prices for natural gas at the European market

 

Spot prices for natural gas increased by 32.0–48.2%, to 15.31–15.93 €/MWh during November at key European hubs, which affect pricing in the Ukrainian market. This was due to a seasonal factor, because, despite the relatively warm weather last month, the consumption of natural gas for heating purposes in the European Union has increased significantly.

So, on November 30, the spot natural gas market on the Powernext exchange ended with the following key quotations:

• at the Austrian Central European Gas Hub (CEGH) the price was 15.31 €/MWh compared to 11.60 €/MWh at the end of October;

• at the Dutch Title Transfer Facility (TTF) the price of gas rose to 15.42 €/MWh against 10.23 €/MWh a month earlier;

• at the German Net Connect Germany (NCG) - up to 15.59 €/MWh against 10.84 €/MWh on October 31;

• at the same time, at the German Gaspool Hub (GPL), the price of natural gas rose to 15.93 €/MWh from 10.75 €/MWh a month earlier.

At the same time, despite a significant November increase, gas prices in these European wholesale centers remain significantly lower than they were last year. So, natural gas quotations at NCG, CEGH, TTF and GPL hubs decreased by 35.6-38.0%, compared to November 30, 2018.

It was this factor, and not political decisions, that allowed the Ukrainian government to offer consumers to conclude contracts for the purchase of gas from January 1, 2020 at the so-called “insurance” price of about 7,000 UAH/1,000 m3 (including VAT, excluding transportation costs).

In particular, during December 2018 — February 2019 (the period that determined gas prices for industrial consumers in Ukraine in the first quarter of 2019), natural gas prices at European hubs were in the range of 17.85–24.10 €/MWh, which is 14.2–33.9% higher than prices as of November 30, 2019.

In addition to the seasonal factor and supply and demand levels, oil benchmarks are still the basis for pricing natural gas on the international markets. So, over the past 13 months, from the beginning of November 2018 to the beginning of December of the current year, prices for Brent crude oil fell by 17.01%, to $60.49/barr.