According to the Federal Network Agency, energy prices in Germany somewhat settled at appropriate levels. However, Klaus Mueller, the President of the Agency, believes the risks of a new surge in gas prices are still high.
Currently, the energy market in Germany has reached an equilibrium but it is still fragile. Mueller said gas prices had recently reached a "plateau" level that would persist for the next 1-2 years. Nevertheless, there are certain risks that might trigger a new uptick in energy prices, namely colder temperatures in the winter season of 2024, higher energy demand in China, and the vulnerability of gas infrastructure, referring to the sabotage of the Nord Stream pipeline.
Mueller noted that Germany managed to survive the winter thanks to a sufficient gas supply. However, there was the risk of a supply emergency. Earlier, analysts stated that European underground gas storage (UGS) facilities were more than 90% full. Notably, 90% reflects average historic EU storage filling levels.
Gas prices are declining amid a relatively warm winter in Europe, whereas gas supplies are rising. Interestingly, Gazprom claimed that even sufficient gas supplies would hardly help Europe to go through the winter season.
As a reminder, in the summer of 2022, the European Union faced an energy crisis that was gradually escalating. The situation was aggravated by gas supply disruptions from Russia. A bit later, the European Commission called on the eurozone countries to cut energy imports from Russia. Apart from that, EU nations committed to voluntarily reducing their natural gas use by 15% between 1 August 2022 and 31 March 2023 in an attempt to fill gas storage up before winter.
