Market commentators were left scratching their heads on Monday, with natural gas prices in Europe soaring by over 10% when the fundamentals appeared to be exerting downward price pressures.
Asian prices rose only modestly so the TTF-JKM spread collapsed by 45% to just USD 1.20/MMBtu.
With Australian strike threats past, Norwegian gas flows to Europe slowly ramping up, gas flows to US LNG export plants back to near normal levels and the weather still mild for the time of year, Energi Denmark said in its daily market summary: “The market might be reacting bullishly due to speculative traders closing their short positions.”
Whatever the driver behind Monday’s volatility – with worries over the future of residual pipeline gas exports from Russia a likely contender – European prices on Tuesday morning were on a downward trajectory.
TTF front-month futures closed up 10.9% on Monday, from USD 12.43/MMBtu on Friday to USD 13.79/MMBtu, the highest close in well over a month. The Henry Hub-TTF spread was up 13% to USD 11.13/MMBtu.
In the UK, NBP was up 10.0%, from USD 12.52/MMBtu on Friday to USD 13.77/MMBtu on Monday.
In Asia, JKM was up again, rising by 2.7% on Monday, from USD 14.60/MMBtu on Friday to USD 14.99/MMBtu.
In the US, Henry Hub flat-lined, remaining at USD 2.64/MMBtu.
Oil prices too continued to plateau, with Brent up by just 2 cents from USD 93.27/barrel on Friday to USD 93.29/barrel on Monday, while WTI was down 0.4%, reversing the previous session’s modest rise, from USD 90.03/barrel to USD 89.68/barrel.
Front-month futures and indexes at last close with day-on-day changes (click to enlarge):
Time references based on London GMT. Brent, WTI, NBP, TTF and EU CO2 data from ICE. Henry Hub, JKM and API2 data from CME. Prices in USD/MMBtu based on exchange rates at last market close. All monetary values rounded to nearest whole cent/penny. Text and graphic copyright © Gas Strategies, all rights.