Natural gas prices drop below zero - but don't expect energy bills to fall, expert says

By ITV News Multimedia Producer Daniel Boal

A mixture of mild weather and stockpiling natural gas across Europe resulted in spot prices briefly going negative this week.

But, the momentary downturn in the gas market won't be reflected in consumers bills.

Officials have been warning of an energy crisis for months and Russia's move to slash energy supplies in response to financial sanctions has resulted in EU countries stockpiling supplies for the winter.

As EU gas storage facilities fill up, tankers carrying liquified natural gas queue up at ports unable to unload their cargos - sinking prices.

The price of natural gas futures dropped by around 20% in the past week - and by more than 70% since the end of August.

Dutch gas spot prices for delivery, a measure that reflects real time market conditions, dropped below €0, according to the intercontinental exchange.

Experts have said prices dipped due to grids being oversupplied.

Professor Paul de Leeuw, director of the RGU Energy Transition Institute, at Robert Gordon University said: "Prices are very volatile and dependent on a number of things. The UK is experiencing very mild weather at the minute and as such there is less of a need for gas.

"If prices like this were consistent then it would be something that consumers would notice. Constantly low prices would have an incremental change on the UK gas market.

"But a dip in prices like this won't have an immediate impact on the prices that people at home pay."

Liquified natural gas suppliers are already looking to redirect shipments to Asia due to more attractive prices, according to traders.

Asia market prices jumped above European gas benchmarks for the first time since June this week.

Additional supply to Asia could go someway to quelling fears of winter shortages, especially as forecasts predict colder weather in Japan.

Some Asian countries like Pakistan and Bangladesh have struggled to procure gas after Russia's invasion of Ukraine upended the markets.

Professor of Petroleum Economics at Aberdeen University, Alex Kemp forecasts that the stockpiling of gas in recent months will begin anew next year.

He said: "What we have seen in the past few weeks and even days is the spot price of European gas dropping. Gas has been sourced increasingly from parts of the world such as America, Qatar and even Australia.

"Countries have been competing with Asian markets in order to fill storage facilities which are currently around 80% full.

"Dependent on usage, and even if we have a mild winter, these stores will be greatly depleted come next year and the hunt will start all over again."

The UK currently uses natural gas to produce around 40% of its electricity.

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