European hubs reaching peak levels

This week has resulted in gas prices at European hubs reaching their highest levels since late 2019. The previous maximum of 23 October, that many commentators had believed to remain unbeatable in 2020, was swept away in just three trading days.

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The period from 8 to 11 December stands as a shining example of how several factors of price support can perform together within a very short time frame.

Prompt contracts were continuing to experience the effect of strong demand while positive price movements on related commodity markets have provided support to gas products further out along the curve. The increase in coal prices that has been ongoing since early December, higher Brent which has topped $50/bl for the first time since pandemic began as well as EUAs at an all-time high could not but affect the far-curve.

Yet, it seems that the main ingredient for such a growth of European hub values is LNG market dynamics. A small number of cargoes imported to NWE this month together with LNG prices skyrocketing in Asia have provided support both to prompt contracts and near-curve. With the JKM – TTF spreads players are currently witnessing, the uncertainty around LNG spot supplies to Europe in Q1 is only increasing.

Source: Yakov Grabar

See original post by Yakov on LinkedIn.