Skip to content

Natural Gas Prices Plunge

April 6, 2019

By Paul Homewood


Gas prices are in freefall, according to latest analysis from Timera:



TTF prices fell by more than 50% across Winter 2018-19.  No… that is not an April Fool’s joke.  The decline in European and Asian gas prices across the last six months has been steep and relentless.

The price decline gathered pace in Q1 2019 as shown in Chart 1.  As the quarter progressed, Asian spot LNG prices converged with European hub prices. Then in late March, the key North Asian LNG price marker JKM crashed through the TTF price level.

If the Q1 2019 price decline were a ski slope it would be marked with double black diamonds.



Chart 1: Global gas price regional benchmarks (historic spot & current forwards)Source: Timera Energy



Price behaviour is consistent with an acute near term surplus of LNG into the start of summer. The growth in new LNG supply (e.g. from projects in Australia, Russia and the US) is at least temporarily outpacing demand growth.

The LNG market is clearing surplus cargoes via sending them to liquid north west European hubs. The discount of JKM to TTF reflects this dynamic, although liquidity in spot cargoes has been limited across recent weeks.  At current prices it makes no sense to send US LNG to Asia.As a result of these dynamics, LNG delivery volumes into Europe surged in Mar-19 to their highest level in history.

This coincided with a second European gas market record. Russian import volumes in Mar -19 were also the highest in history. Gazprom has shown no inclination to ease back on supply as prices have fallen.

As well as very strong import volumes, European gas demand has been relatively weak.  Q1-19 has been unseasonably warm.  Coal prices have also been falling, reducing the gas price switching levels at which incremental power sector gas demand kicks in.  And European industrial and manufacturing data across Q1-19 has been very weak (particularly in Germany & France).


Full story here.


The most recent government set of fossil fuel prices, published last December, show the central scenario gas price at 57p/therm, well above the current 12-month forward price of 44p, according to Catalyst Energy.




Lower gas prices mean in turn lower power prices, with forward electricity prices back below £50/MWh for the first time since last May.

Lower power prices make renewable energy even less competitive.

  1. Joe Public permalink
    April 6, 2019 11:47 am

    For those east of the pond, an ‘mmbtu’ is a ‘therm’ which is 29.3071kWh.

    • It doesn't add up... permalink
      April 6, 2019 1:53 pm

      Actually, MMBtu is 10 therms. 1 therm = 100,000Btu.

      The Timera chart shows TTF price, which is a gas hub in the Netherlands, with all its prices converted to $/MMBtu from original currency and energy unit (TTF is normally quoted in €/MWh). TTF is usually reasonably close to the UK NBP pricing basis (traded in p/therm), tied by arbitrage via the BBL pipeline. It may be higher or lower, depending on the direction of flow.

      • Joe Public permalink
        April 6, 2019 11:04 pm

        Yup – mea culpa.

        MM btu is 1,000 x 1,000 Btu = 10 therms = 290.3071 kWh

    • Ken Brown permalink
      April 6, 2019 9:14 pm


      That’s not entirely correct. A therm is a unit defined as 100,000 BTU (10^5) BTU while the unit mmBTU is 1,000,000 BTU (10^6) BTU so there is a factor of 10 difference. A therm is indeed equivalent to 29.3071 kWh

      • Joe Public permalink
        April 6, 2019 11:05 pm


  2. A C Osborn permalink
    April 6, 2019 12:10 pm

    I wonder if the Consumer will ever see the benefit?

    • Athelstan. permalink
      April 6, 2019 1:24 pm

      a rhetorically posed question, indeed you will evidently know the answer to AC.


      The joke is always on the UK consumer but it ain’t funny, not at all. And a market dictated to by the Government and the green agenda dumps on competition from a great height so that savings in world energy spot prices are never felt nor passed on to UK users. Conclusion and where there is injustice and the iniquity of heavily slanted, greatly unbalanced energy policy a seething hatred is ignited, now burning as good as coal, burning bright.

  3. Ian permalink
    April 6, 2019 1:18 pm

    Bugger! I’ve just taken out a new energy contract. All suppliers were higher than my last one.

  4. It doesn't add up... permalink
    April 6, 2019 1:24 pm

    Off topic:

    I feel that Michael Crick is opening himself up here: a few pictures of the wind farms along the M74 to Glasgow and a question as to why such unsightly beasts were authorised seems to be in order.

  5. It doesn't add up... permalink
    April 6, 2019 1:41 pm

    On topic:

    Wholesale spot prices have indeed fallen, since they are set by gas generation most of the time. There are essentially two versions of CCGT cost: those stations that operate in base load mode at 60% efficiency, able to dilute their fixed costs across perhaps 8000 hours a year on average, and those that are flexed up and down to meet swings in demand and renewables generation that operate at much lower utilisation and efficiency, because of ramping.

    You can look at the history of UK spot power prices here:

    They have fallen from £63/MWh last September to £43/MWh in March, with March 24th producing a low of £31/MWh (click on month and year options to see the appropriate charts). What is also of interest is to see how our increasing reliance on interconnectors means that our spot power is consistently more expensive than on the Continent (as it must be to ensure the flow to us). You can see that if you click on “CWE prices” here:

    Of course, OFGEM have allowed the bill cap to rise just as wholesale spot cost is falling. But the reality is that we have those expensive offshore wind farms to pay for that have just come on stream.

  6. A Norwich Tory permalink
    April 7, 2019 4:46 pm

    “The most recent government set of fossil fuel prices, published last December, show the central scenario gas price at 57p/therm, well below the current 12-month forward price of 44p”.


  7. BLACK PEARL permalink
    April 8, 2019 6:37 pm

    Has anyone contacted their supplier using this information to see if the reduction is going to be passed on ?

Comments are closed.

%d bloggers like this: