EU gas prices drop as debate on cap continues

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Spot prices for gas fell below $1200 per thousand cubic meters on Monday, data from the London Intercontinental Exchange (ICE) shows. The decline is attributed to the latest projections of warmer weather in northern Europe in the coming days, that is expected to decrease heating demand after a recent freeze.

The price of gas futures for January delivery at the TTF hub in the Netherlands was down 4.7%, trading at $1211 per thousand cubic meters as of 11:40 GMT.

Meanwhile, EU member states are meeting in Brussels to resolve the deadlock over a proposed gas-price cap. Under the original plan put forward by the European Commission, the gas price cap would be triggered when prices on the TTF exchange, Europe’s gas benchmark, reach €275 ($292) per megawatt hour and are €58 higher than the LNG reference price for two weeks.

However, the Czech government, which currently holds the bloc’s rotating presidency, has proposed that the ceiling be lowered to €188 per megawatt-hour.

Some member states have opposed the measure, warning of market volatility, while others have argued that the initially proposed level was too high to be effective.

Additionally, there are mounting concerns in the EU over potential supply shortages. Some member states fear cargoes loaded with liquefied natural gas may move to Asia if prices there are higher than the cap set by the EU. China’s energy demand is expected to recover after Beijing relaxed Covid-related restrictions earlier this month.

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