The validity of the market correction mechanism with a cap on prices for certain gas futures in the European Union has so far been extended until February 2024, according to a release from the EU Council. It also considers gas prices corrected for inflation. The European Commission will have to submit assessing the new legislation creating the market correction mechanism by Nov. 1, 2023, and will be able to propose extensions.

EU energy ministers on Monday agreed to create this temporary mechanism. We may also see gas price stock market correlation. It will be automatically triggered when the monthly Natural Gas Futures price on Europe’s largest gas hub, the TTF, exceeds €180/MWh (about €1,861 per thousand cubic meters) for three working days and simultaneously when this price is €35 higher than the indicative LNG price on world markets.

The mechanism will become a working tool from February 15, 2023. It will apply to all virtual gas trading platforms in the EU, the European Commission may later make exceptions to this rule. The mechanism will apply to futures contracts for a month, three months and a year ahead. It will not work for OTC transactions.

Earlier we reported that the media named the government price limit for gas, which is subject to EU approval.