Crude oil and natural gas rates drop amid economic downturn worries

Gas prices throughout Europe have reached a 21-month low just before the upcoming quarterly price cap review by the UK energy regulator, Ofgem.

European hub spot prices have decreased to €36.4/MWh, a 3% drop today, while prices at the UK’s Bacton hub are slightly below 83p per therm.

Wholesale gas sales have now plunged by approximately 90% since September, when concerns over Russian gas supplies peaked and prices in Rotterdam and the UK reached €342 and 650p per therm, respectively.

In its previous review on February 27, Ofgem set the annual cost cap for electricity and gas at £3,280 for an average dual-fuel (gas and electric) user, based on a wholesale price of around 270p per therm, plus standing charges.

UK electric prices have also fallen from £548/MWh in September to £91 presently (source: Trading Economics).

The next Ofgem review is scheduled for May 26.

Traders have attributed the continuous decline in gas prices for the past seven days to record levels of LNG imports into Europe.

In addition, oil prices have plummeted, with Brent crude falling below US$73 per barrel today amid concerns that the US Federal Reserve may further tighten the US economy by increasing interest rates once more tonight.

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