TTF prices have climbed back above the €50/MWh mark as tightening LNG supply fundamentals, lower renewable output in Europe and renewed concerns over Asian LNG demand combine to increase volatility across the European gas market.
Following a wait-and-see moment, TTF prices rose by 15% through the last week to breach the €50/MWh mark for the first time since the announced ceasefire agreement in early April.
There are several factors contributing to this increase in gas prices:
(1) lower LNG supplies: maintenance and unplanned outages at several US LNG plants are further tightening short-term supply fundamentals;
(2) colder weather in Europe, coupled with lower renewable output, is increasing the call on gas-fired power plants;
(3) there are rumours of domestic production outages in China, which could increase the country’s LNG import requirements.
Meanwhile, seasonal spreads on TTF remain in negative territory, which weighs on storage injections and hence limits EU LNG import needs for now… but this could change over the summer.
What is your view? How will gas prices evolve over the summer season? Is volatility back?
Source: Greg MOLNAR
