European Gas Prices Slide as Alternative Shipping Routes Eases Pressure
European and British wholesale gas prices continued their downward trend on Monday, dropping over 2% as evidence of alternative shipping routes around Persian Gulf choke points helped alleviate energy risk premia.
The benchmark European gas price fell 2.5% to trade at 77.55 euros per megawatt-hour (MWh), building on last week's multi-session pullback, while the equivalent British wholesale gas price slid 2.91% to reach 192.36 pence per therm, anchoring near multi-week low watermarks.
The European Central Bank (ECB) has warned that wholesale natural gas price changes now feed into consumer gas inflation within 1 to 3 months in over half of euro area countries, a significant acceleration compared to 2022. This is driven by post-crisis market liberalisation, more flexible pricing structures, and shorter fixed-term contracts.
The ECB's findings add pressure on Frankfurt as headzone inflation remains above 3%, with some economists projecting a rise toward 4% by year-end. The bank noted that electricity prices are now less responsive to natural gas swings than in past cycles, thanks to expanding renewable power generation reducing the direct role of fossil fuels in determining marginal power costs.