TTF gas prices surged to their highest since Dec22, with the European benchmark closing yesterday at just over €87/MWh ($27.3/mmbtu).
After a short-lived bearish turn, TTF prices rose by almost 20% since the end of September. Several, short-term factors are contributing to this strong increase:
(1) Colder weather forecasts for the second half of October could give an early boost to rescom demand;
(2) Stronger Asian buying interest: could this be related to China’s recent order to fill up storages to max levels ahead of winter?
(3) Unplanned outage at the Kårstø processing plant in Norway is reducing supply by around 13 mcm/d (although this is expected to be solved by 15 Oct);
(4) Maintenance start at the Atlantic LNG plant 2 in Trinidad & Tobago is further reducing the supply of chilled gas and hence tightening the market fundamentals.
All above are the short-term factors at play and we will certainly see some price readjustments, partly driven by momentary profit-taking.
But overall two key factors will matter this winter:
(1) Geopolitics in the Middle East, which seems to be worsening with the growing involvement of the Houthis;
(2) EU gas storage levels: trending at decade low levels and with no sign of major change in the trend as we enter the winter season.
What is your view? How will the gas market evolve? Are the bulls back with full force?
Source: Greg Molnár (LinkedIn)
