The gas storage factor

European gas market was no less dynamic in the late winter than in the previous two months, to say the least. Weather influence on prices predictably declined at the end of Q1 as compared to Jan and Feb, while the low stocks in the UGSs began to loom large in Mar.

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Gas volumes was being withdrawn from the storages over 130 consecutive days and, as soon as Day-Ahead dropped to a discount to Front-Month, net injections into the regional facilities resumed on 26 Mar.

This year, players began stockpiling nine days earlier than in 2020. As a result of an earlier start of injection season, gas prices saw a strong growth in late Mar – early Apr.

The development of spread between Q2 and Q3 over the course of Mar provides another clear illustration of the attention players pay to the storage factor. If the former was trading at a discount to the latter in the first half of Mar, then in the final days of winter the Q2 contract flipped to a premium over Q3. This is despite the expectations that LNG imports to Europe will stay high in Apr-May.

From the very beginning, summer of 2021 shaping up to be very intriguing, particularly given that the market is getting closer to the Norwegian maintenance season.

Source: Yakov Grabar

See original post by Yakov at LinkedIn.