Data from the Quarterly Bulletin “Natural Gas Price”, Volume III, produced by the Intelligent Energy Association, shows that the end of 2017 has brought a significant increase in the price of gas on the market. This rise stemmed from persuasive actions inducing in the market the idea of a gas crisis in the Winter of 2017-2018 and the need to raise gas market prices to prevent this crisis. Such a signal drew the attention of market participants who panicked and caused an escalation in gas prices in December 2017-January 2018. Winter 2017-2018 was relatively mild, with only two episodes in which temperatures fell below the normal minimum levels. These factors determined that after January 2018 there would be corrections to the price of natural gas, for re-entering a trend similar to that in 2017. The price of natural gas decreased, as compared to the peak reached in January 2018, and the trend will continue in the Summer months.
Romania Gas Prices – history and trends
Analyzing the transactions closed between October 2017 and March 2018, within the platforms provided by the Romanian Commodities Exchange (RCE), we determined the average price weighted with the quantities of gas purchased over a one month period and immediate delivery on the wholesale market and the price of natural gas purchased in the last 12 months with delivery in the same month, taking into account all gas sources that were traded on RCE (domestic, import, storage).
It is visible a big difference that occurred in the price paid by gas buyers in the months before delivery in December 2017-January 2018 and the small difference between the two practices outside this interval. We note that the main source of gas traded on the centralized market was gas from the current domestic production.
Analyzing the transactions carried out through RCE during this period it can be observed that the price of gas paid for daily purchases (2-3 days) was 14.6% higher than the weighted average price of the gas purchased and delivered in the same month. The difference between gas purchased in that month and gas purchased at the peak of consumption is twice as high as the difference in the Winter of 2017. This shows the risks of lacking a Network Code to discourage speculation and the speed at which speculators have learned to take advantage of crisis situations.
Analyzing the transactions carried out through RCE during this period it can be observed that the price of gas paid for daily purchases (2-3 days) was 14.6% higher than the weighted average price of the gas purchased and delivered in the same month. The difference between gas purchased in that month and gas purchased at the peak of consumption is twice as high as the difference in the Winter of 2017. This shows the risks of lacking a Network Code to discourage speculation and the speed at which speculators have learned to take advantage of crisis situations.
Analyzing the price of gas offered on the wholesale market through the trading platforms of RCE with delivery in October-December 2017 and January-March 2018, we estimate a trend of lower gas price of current production on the wholesale market with monthly delivery. The gas price during the Summer period will decrease compared to the price at which the gas was traded in the Winter, but it will not fall below the price recorded in the warm season of 2017.
Transactions on the retail market are much fewer than in the previous period or compared to the same period in 2017. In order to be able to make a comparison of the prices of gas (gas commodity), we have determined for each consumer who traded the tariffs and we thus deduced the price of gas-commodity. The average transaction prices between October-December 2017 and January-March 2018 no longer show differential prices for the four consumer categories B1-B4, with prices. Thus, the graph we present shows how these prices evolve over time, highlighting an increase in the price of natural gas sold in the Winter months and how it declined it in the Spring months.
World Gas Prices – history and trends
Analyzing the global trends in natural gas prices, a trend for a slight decrease in the price of natural gas during the Summer is visible. The CEGH Hub in Vienna, the nearest gas exchange in Europe in Romania, shows a 1% drop in natural gas prices compared to the first quarter of 2018, in the futures market, customers expecting gas to be traded over the warm period with 86-87 lei/MWh. The experience of the past years allows us to use this price as a benchmark for the price of gas in the Russian Federation sold to Central and Eastern Europe.
The US gas price history in the first quarter of 2018 shows the significant increase in January 2018, when the US faced extremely low temperatures. The data from the US Energy Information Administration shows an about 1% increase in the US gas price for the warm season, compared to the Spring price.
Weather Forecast
According to estimates by the National Meteorological Administration, in April 2018 we will have temperatures lower than the normal regime for this period, while the heat regime in May-June will be normal.