(Finance) – The continued decline in gas demand has helped maintain the downward trend in gas prices also in the second quarter 2023, despite the fluctuations recorded in June. In Italy, they register positive signals from hydroelectricity, thanks to rainfall recorded in the spring which partly compensated for the dry winter, but the calming effect on gas prices could only last in the first part of the summer. This is what emerges from the report by Renantis (formerly Falck Renewables), which analyzed the trend in energy prices in the second quarter of 2023.
The gas market
The value of European gas at the Amsterdam Hub (TTF) continued to fall throughout the second quarter, with the exception of June. The bearish momentum caused the price of gas to reach and maintain the pre-crisis level at 33 €/MWh. The downward trend, which began at the beginning of the year, was able to remain unchanged in the second quarter also thanks to the seasonality that characterizes the demandwhich normally suffers a significant decline in the spring.
According to Renantis, “however, the overall picture remains very tense, consequently the market instinctively reacts to bullish news“, An example is the fact that the price jumped promptly in June following the announcement of some maintenance works on gas pipelines GASSCO, the main Norwegian gas network operator responsible for supplying the Norwegian continental shelf to Europe and for the closure of the field of Groningen in the Netherlands.
The low demand for gas has favored the European warehouseswhich have reached a level of fullness comparable to that of 2020, exceeding 75% of their total capacity.
The trend of hydroelectricity
After a rather arid winter due to lack of rain, which foreshadowed an equally arid summer throughout Europe and therefore a possible increase in prices, seasonal rainfall normalized the situation in spring. The stored energy levelin fact, is more than 3,500 GWh, a small fraction of the Italian monthly consumption, which could, however, allow the country not to undergo an uptrend in the first part of the summer. The current situation has already been discounted on the futures market: the one relating to the third quarter of 2023 recorded a significant decrease, going from a maximum price at the beginning of the year of €220/MWh to the current one of €120/MWh.
Starting this month, in which the temperature could rise substantiallyit will be possible test the real resilience of the European electricity system in the first real summer without an inflow of Russian gas. According to Renantis, it remains to be seen whether gas prices will continue to fluctuate around 30 €/MWh or if instead there will be a sudden increase that will bring back the ghosts of the past year, bringing the price back above 100 €/MWh.
“An important point to be taken into consideration on the current situation of hydroelectricity in Italy is that a large part of the reserves comes from spring rains This means that most of the stored water is liquid rather than snow, and this could cause reserves to decline much faster than in past years.”