Gas prices have fallen sharply in recent weeks. In particular, the price of Title Transfer Facility (TTF) – the Dutch gas benchmark – has dropped significantly. The reasons are known and have been seen before in the oil markets. As a result of measures to contain the coronavirus, the global demand for gas has fallen. In addition, gas supply remained solid and inventories are at an unprecedented high for this time of the year. Last week, as a result of this situation, TTF was trading below Henry Hub converted to mmBtu, which is the same unit of account as Henry Hub – the US gas benchmark. Dutch gas production is increasingly being reduced. Shale gas in the US has always been labelled as very cheap, especially after gas as a by-product of oil started being traded. The current low price of the TTF compared to Henry Hub thus reflects the gas market’s oversupply in Europe currently
Source: Hans van Cleef, Sr. Energy Economist, Abn Amro
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