Record warm weather in Europe, gas reserves slightly up, gas price massively down

HUNGARY - In Brief 04 Jan 2023 by Istvan Racz

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It seems that for now at least, Mother Nature is refusing to play to the hands of Vladimir Vladimirovich (Mr. Putin), whose not-so-secret objectives include making Europe truly feel the winter cold, as gas supplies are proving insufficient. In these days, most of Europe, including Hungary, is experiencing unusually warm weather, one record of daily highs of temperature falling after the other. And it has been largely this way for about three weeks now. Making use of this lucky circumstance and the temporary low of industrial activities in the winter holiday season, EU members have managed to refill their gas storage facilities. On January 2, their gas reserves reached 21.4% of 2021 annual consumption, slightly higher than the 21.3% level record on December 21, and really not a lot lower than the 24.5% peak on November 14. Unsurprisingly, the frontrunners in the European gas storage league table are still the four land-locked countries (Austria, Czechia, Hungary and Slovakia) in the middle of the continent. On January 2, Hungary had 42.8% of its 2021 annual consumption in storage, somewhat higher than the usual total consumption of the country in a core winter season (December to February). All this must have greatly contributed to the latest massive decrease of European gas prices, from a peak €236/MWh average in August to €117/MWh in December and €68/MWh today, just as we are writing this note. The latter is set to have a pretty big positive impact on Hungary's BOP, as long as it lasts. But let us do the math together! Hungary had an extremely ugly current account in October, when it paid for its gas imports at the August market price, due to a suspected two-month lag...