By G9ija

Natural gas prices fell as the market awaits details of the European Union’s plan to intervene in an unprecedented energy crisis that is already destroying demand for the fuel.

Benchmark futures declined as much as 9.2% to the lowest in a month. Still, prices remain almost eight times higher than normal for the time of year. Goldman Sachs Group Inc. expects they will halve from current levels sometime in the first quarter of 2023.

European Union energy ministers on Friday called for urgent measures to rein in costs and provide liquidity to the market. Commission President Ursula von der Leyen, who has called for “emergency intervention,” is expected to set out concrete steps this week.

The bloc’s members, all with varied energy needs, are divided on how to implement price caps for gas. The idea of a broader price cap – on all gas imports, not just shipments from Russia – was discussed on Friday, but the ministers agreed more work on this measure is needed.

Norway, a key supplier of gas to Europe, is wary about introducing a price cap, Prime Minister Jonas Gahr Store said after a call with von der Leyen on Monday.

“We enter the talks with an open attitude, but are skeptical about a maximum price for gas,” Store said. “A maximum price will not do anything about the fundamental problem, namely that there is too little gas in Europe.”

There were also no hard decisions from European politicians on mandatory reductions in energy use during last week’s discussions.

“With interventionist policies announced so far prioritizing capping energy costs over curtailing demand, the concern is that such measures could end up incentivizing higher energy consumption,” Goldman Sachs analysts including Samantha Dart said in a note.

The bank expects the high storage levels at the start of the winter season “to accommodate larger-than-average storage withdrawals, still leaving them over 20% full” by the end of March.

“This in our view will set the stage for the sense of urgency to destroy demand we see currently to be gradually replaced by a sense of market relief for having made it through winter,” it said. Goldman Sachs expects benchmark prices to fall below 100 euros per megawatt-hours in the first quarter.

European storage sites are about 84% full, slightly above five-year average, according to Gas Infrastructure Europe.

The region is also adding more facilities to receive liquefied natural gas, with the latest terminal opened in the Netherlands last week.

European LNG imports are expected to be up 16% versus last winter, as new projects in the US and Mozambique start up, Goldman Sachs said. Still, a cold winter in Asia and an economic rebound in China could boost that region’s competition for cargoes.

Front-month Dutch futures traded 6.8% lower at 193 euros per megawatt-hour by 1:52 p.m. in Amsterdam. The UK equivalent declined by 4.3%. Benchmark German power for next year traded 5.4% lower.

There’s still major “uncertainty on the price of gas, and beyond the price of gas – the availability of gas,” Gilles Moec, chief economist at AXA Investment Managers, said in a Bloomberg TV interview. The market is still awaiting details on the EU’s further moves, and if there’s a need for actual gas and power rationing, he said.