Wholesale gas prices drop 10% despite lack of EU price cap agreement

Prices still remain multiples of levels before the Russian invasion of Ukraine, but are back at prices in July before Russia halted gas supplies.

The Nord Stream 1 Baltic Sea pipeline in Germany 

The price of European wholesale gas slid 10% even as European Union leaders appeared, for the time being, to have failed to agree on some sort of price cap that could alleviate the pressures on household and business bills.

Futures markets showed the price of wholesale gas for delivery next month fell 10% to €157 per megawatt hour and the price for delivery in December was also down to €167.50 per megawatt hour. 

Prices still remain multiples of levels before the Russian invasion of Ukraine, but are back at prices in July before Russia halted all gas supplies along the sub-sea Nord Stream 1 pipeline to Germany. 

EU leaders in Prague have been seeking to reach agreement on ways to control wholesale gas prices which have driven up energy prices and led to widespread inflation across Europe. 

EU governments have responded with huge subsidies to offset some of the price hikes for their citizens and companies, including a €4.1bn plan by the Government here to help households and businesses with soaring energy bills. Germany has responded with outsized subsidies that has attracted criticism from some member states with less fiscal financial firepower. 

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Gas is particularly important in Ireland for generating electricity on the all-Ireland power grid. Though the bulk of the supplies are sourced from the North Sea, Irish wholesale prices are nonetheless directly influenced by the continental gas market.  

Most of the EU's 27 countries meeting in Prague want a cap on gas prices, but disagree on the details, with options including a cap on all gas, a "dynamic corridor", a price ceiling on gas used for power generation specifically, or on Russian gas only.

The EU has been discussing the matter for weeks, so far without result, although the 27 have agreed other joint steps to help them weather an acute energy crunch as runaway prices threaten to bring about a recession in the bloc.

Everyone agrees we need to lower power prices, but there is no agreement on what instruments to use to that end exactly," said Poland's prime minister Mateusz Morawiecki.

Italy's Mario Draghi said the European Commission would present a broader package of short-term measures to lower prices, as well as longer-term steps to redesign the electricity market at the next meeting of EU leaders on October 20-21.

The cap is one of a range of proposals and initiatives by European states to cope with plummeting gas supplies from Russia, which once supplied 40% of Europe's gas needs. 

Support for Ukraine

While squabbling over ways out of the energy crisis, the EU showed unity in vowing continued support for Ukraine.

We are determined to mobilise all possible tools and means to support Ukraine with financial means, with military support, with humanitarian support, and of course with political support," said the summit's chairman, Charles Michel.

The EU would back Ukraine for "as long as it takes", said European Commission president Ursula von der Leyen, after Ukrainian president Volodymyr Zelenskyy addressed the EU leaders through a video link.

Additional reporting Reuters