The EU plans to set a dynamic ceiling on natural gas prices and limit the range of rise and fall in a single day

According to media reports, the European Union plans to introduce new measures to intervene in the natural gas market this week. The European Commission will propose to implement a dynamic price ceiling on natural gas and limit the daily fluctuation of natural gas futures trading prices.

EU leaders are scheduled to hold a summit on October 20-21 to discuss a series of measures to implement a price ceiling on natural gas, which has been debated for several weeks.

The draft disclosed by the media shows that, as a "last resort", the European Commission will propose to implement a dynamic price ceiling on the natural gas transactions of the Dutch Natural Gas Trading Center (TTF) for a period of no more than three months, while other natural gas trading centers in Europe will also be linked to the revised TTF spot price through the dynamic price corridor.

The European Commission also proposed that EU trading venues should set a ceiling on the one-day rise and fall of energy derivatives in recent months before January 31 next year to prevent extreme price fluctuations.

The draft emphasizes that these measures cannot affect the security of supply, increase the consumption of natural gas, or affect the orderly operation of the energy derivatives market.

The above proposal needs to be approved by EU countries. Since the European Commission first proposed to set a price ceiling on Russian natural gas in early September, EU governments have been arguing for this for more than a month.

As the largest natural gas trading center in Europe, the natural gas futures price of TTF is regarded as the benchmark natural gas price in Europe.

However, with the outbreak of the conflict between Russia and Ukraine, the price of natural gas has soared, and the EU has become increasingly distrustful of TTF. Earlier this month, European Commission President Von Delain said that after Russia drastically reduced its natural gas supply to Europe, the proportion of Russian gas in European natural gas demand fell from 40% to 7%, and TTF could no longer accurately reflect the energy situation of the EU.

As the EU is turning to liquefied natural gas (LNG) provided by the United States and Qatar, the European Commission hopes to establish a new natural gas trading benchmark.