According to SEB, the energy crisis is over and the estimates for gas prices in Europe in 2024 have been lowered. However, it will not be cheap. “A new normal,” says SEB analyst Ole Hvalbye.
SEB analyst Ole Hvalbye covers the gas market. Photo: SEBPublished: Published:
26th of December
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SEB has created new estimates for gas prices and expects slightly lower prices in 2024 than previously.
“We believe that the energy crisis in Europe is now over. What has happened from the middle of 2021 until now has been the worst,” says SEB analyst Ole Hvalbye to E24.
The brokerage firm expects a price level for European gas of around 40 euros per megawatt-hour in 2024.
This is roughly in line with the price level this fall, but a downgrade of SEB’s previous 2024 estimate of 52.5 euros per megawatt-hour.
But even though the acute crisis is over, Europe is unlikely to return to earlier times when industry and consumers could enjoy relatively cheap Russian gas. SEB estimates a gas price of 40 euros per megawatt-hour for both 2025, 2026, and 2027.
“This is a new normal. We expect higher prices for a longer time. Prices are expected to be almost double the normal,” says Hvalbye.
“This influences electricity prices, including Norwegian electricity prices. It is the most expensive power that sets the price level for electricity in Europe, and that is gas power,” he adds.
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– Has been very privileged
Gas prices this fall have averaged around 37 euros per megawatt-hour, which corresponds to an oil price of around 64 dollars per barrel. This is 1.8 times higher than what has been normal European gas prices historically.
“We have been very privileged with cheap energy for a long time. Unfortunately, that time is probably over. Energy will be priced in a different way than before. The worst crisis is over, and we have managed surprisingly well. But there will be a high-price regime going forward, there is little doubt about that,” says Hvalbye.
“A long period with quite high gas prices, what does that mean for industry and activity in Europe?”
“It has been a huge problem. The industry was built on cheap Russian gas, and these high prices have been huge dramatic. Those who cannot produce at today’s prices shut down or operate at half capacity,” says the analyst.
etc… and so on.