When will gas prices in Poland finally fall?

Natural gas prices in Europe and the US are falling. This contributes to lowering inflation and confirms forecasts for economic activity. In Poland, however, prices still remain high - both for the industry and for individual recipients.

Consumption lower than last year

The price of natural gas in the US fell below the $2 level (for 1 MMBtu - Million British Thermal Units) and are approaching their all-time lows. Gas is almost twice as cheap as its long-term average ($3,85 per MMBtu). Gas has only been this cheap 4 times in the last 25 years. The US has had one of the three warmest starts to the year since 1895. This has resulted in consumption being lower than last year and inventories down 23%. higher than average.

The American Energy Information Administration (EIA) forecasts that in 2023 gas prices will increase to an average of USD 3/MMBtu, which will be caused by a double-digit increase in demand for LNG gas and seasonal demand for electricity. What distinguishes the current situation from previous price lows is no significant reduction in production gas. This is due to the volatility in the market and the fear that the price may fluctuate significantly in the short term.

Currently, the number of drilling rigs used to extract natural gas is 18% higher than in the previous year. than a year ago, while during the two previous gas price lows, the number of production installations shrank by 60-80 percent. relative to price peaks.

We have a similar situation in Europe as well. TTF natural gas prices fell because of the warm weather, reduction of demand by industry and consumers, and above-average filling of gas storage facilities. However, this price drop has its limits. Europe is already starting to focus on another winter heating season and restocking warehouses. This involves the risk of a complete cut-off of supplies from Russia and growing competition on the LNG market from re-opening China. LNG demand in Asia is typically more than twice that of Europe. The continent's exposure to the LNG spot market has increased dramatically from 20% to up to 50 percent in the last two years.

When will the price drop?

The key question remains about gas prices in Poland. Despite the declines in global stock exchanges, they remain high all the time, which it strengthens inflation and weakens the competitiveness of Polish enterprises. Individual customers, paying more for gas, have less money to make other expenses. The high level of regulation of the Polish gas market made it possible to postpone price increases, but now it makes it difficult to adjust them to the lower level of global markets.

Falling natural gas prices can also be painful for investors, who can now trade and invest in gas through investment platforms such as eToro.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.