European natural gas costs dropped sharply on Wednesday, shortly after Italy announced that it would continue to receive gas from Russian supplier Gazprom.

The Dutch Title Transfer Facility (TTF) Gas Futures contract is a virtual trading point for natural gas in the Netherlands and a benchmark for trading in Europe.

It fell by about 6 per cent to €160 ($158.69) per megawatt hour.

This is the lowest level since it hit €155 in late July.

The news came after Russia said it planned to continue pumping gas through Austria to Italy following a short supply halt at the weekend.

Russian majority state-owned energy corporation Gazprom said there were absolutely no geopolitical reasons for the delivery.

Rather, the halt was caused by payment issues.

The Italian minority-owned company announced on Wednesday that it found a solution to the problem with Italian customers.

Additionally, “concerns over supply shortages this winter may have been mitigated by a recent IEA report,” said experts at the German bank Commerzbank.

If zero energy-saving measures were taken, gas storage was likely to fall to a critical level of five per cent, the International Energy Agency reported.

However, if gas consumption is reduced by about 10 per cent of the five-year average, the gas storage level could reach 25 per cent, said Commerzbank.

Natural gas prices are still sitting at a historic high.

The TTF price had temporarily risen to $311 on August 25.

The interruption of Nord Stream 1 deliveries drove increased prices at the time. 

(dpa/NAN)