European benchmark Dutch TTF prompt natural gas futures traded at €27.78/MWh Tuesday continuing it’s slide under €30/MWh after closing €29.30/MWh Monday, its lowest for any day since 17 June 2021. The move follows Europe TTF gas being down -7.91% last week, and down -65.67% year on year and in the UK natural gas was down -10.67%, down -54.16% year on year. US benchmark Henry hub rose 14.12%, but still now down -68.35% year on year. Gas stockpiles in northwestern Europe (Belgium, France, Germany and the Netherlands) were currently about 56% of capacity, about 63% above its five-year (2018-2022) average for this time of year, Refinitiv said. Additionally fast LNG send out and weak demand have steadily weighed on prices.
Power-sector gas demand has also been weak. Strong renewable generation and weak overall power demand have weighed on gas-fired output, even with gas ahead of coal in the merit order Argus reported.
Dutch TTF Futures
Prices have fallen sharply despite the first of two periods of heavy maintenance at Norwegian fields and processing facilities this summer has begun, curtailing Norwegian production. European gas hub prices even fell on the day that an unplanned shutdown was announced at Norway’s 4.2mn t/yr Hammerfest LNG export terminal.
Dutch TTE Futures
TTF to Northeast Asian (ANEA) LNG
As the TTF front-month price has fallen, it has moved to a discount to Argus’ northeast Asian (ANEA) LNG-delivered price for the same period, although the discount was still too small to cover the additional transport costs associated with sending an Atlantic-basin LNG cargo the longer journey to northeast Asia rather than Europe. The TTF front-month market first moved to a discount to the ANEA contract on 16 May, and has closed below it in the three most recent assessments.Oscar Mahony – Argus
European Natural Gas Quick Look
Norway Gas to Europe
Nominated Norwegian deliveries to Europe, including the UK fell to 258mn m³/d on 16-23 May from 285mn m³/d earlier in the month.
European Energy Crisis Watch
Natural gas prices had been held hostage to the restricted flow of Nord Stream from Russia and the hot weather sweeping the USA. The energy crisis pounding the world with unheard of prices was impacting the domestic pricing. In Europe we saw record highs again but since then prices collapsed from newly sourced supply and less severe weather coupled with collapsing industrial demand.
Threats to Europe “include potential outages in gas-exporting Norway, an economic rebound in China, and renewed competition for cargoes from southeast Asia if LNG prices keep falling could deplete Europe’s inventories, said Eugene Kim, a research director at energy-consulting firm Wood Mackenzie. In that scenario, “the onus to refill will be even higher,” he said.
Catalysts to watch:
- Hotter or colder weather hitting demand.
- Russia halting transfer.
- German rationing
- French nuclear power
- Freeport LNG
- Norway supply
- Putin constant threats
Norwegian exports to Europe were nominated at just 226mn m³ for today, the lowest for any day since 8 June last year.
Daily Europe Natural Gas Inventory Watch
The European Union wants utilities to refill stockpiles during the summer injection season to 90% of capacity by Nov. 1. Gas stockpiles in northwestern Europe (Belgium, France, Germany and the Netherlands) were currently about 56% of capacity, about 63% above its five-year (2018-2022) average for this time of year, Refinitiv said.
Argus said this has lifted aggregate EU stocks to 745TWh, equating to 66pc of capacity, and well above the 473TWh a year earlier. The European stock build has picked up over the course of May, with net EU injections averaging 3.83 TWh/d on 13-21 May, up from 3.05 TWh/d earlier in the month and 1.58 TWh/d in April, according to the latest GIE transparency platform data.
Daily Europe NG inventory by year. Europe NG storage is at 78.7% of capacity. That is 0.5% vs 5yr avg.
U.S. gas inventories are currently about 21% above their five-year average. Since the turmoil after the Russian invasion prices have come down with storage build, warmer weather, wrecked economy meaning less energy demand.
Sustained brisk LNG send out has bolstered available supply for injections. Aggregate European send out, including the UK was 4.89 TWh/d on 1-21 May, up from a three-year average of 3.61 TWh/d.
US LNG Exports
Natural Gas Feed to US Facilities
Sabine Pass, Cameron, Elba Island, Cove Point, Freeport & Corpus Christi combined.
On Friday March 25, 2022, from a EU/NATO meeting in Poland, the Biden administration and European Union (EU) leaders announced a new effort to ensure Western supplies of natural gas to the continent through 2022 and beyond. The United States and the EU now have a joint goal to send an additional 15 billion cubic meters of LNG to EU countries in 2022, about 1.5 Bcf/d, with “expected increases going forward,” according to the White House.
U.S. exporters have little room to ramp up more in the near term, and Western governments do not have the power to order private companies in the LNG market to direct shipments to Europe.
European Natural Gas Demand
Demand switching and destruction across Europe, overall gas demand down more than 15% on 5-yr avg
With Germany the epicenter of Russian gas bans the real threat of demand destruction is plain for all to see. Germany’s trade balance came in at minus €1bn in May 2022, which is the first negative print since 1991 due to its energy problems & weakness in manufacturing.
Energy Price Matrice Performance
Henry Hub was the worst performing future in the first quarter of 2023. Natural-gas prices on the New York Mercantile Exchange lost 53% in the first three months of the year and fell to their lowest finish in about two-and-a-half years earlier in March. Moving forward weather, ETF speculation and the strength of LNG demand will determine U.S. natural-gas prices. Remember natural gas prices are majority affected by domestic actions, for the US the variance is exports, that is Mexican pipelines, Canadian imports and LNG exports.
All that is left of Russian gas flows to Europe is one operating point in Ukraine via Sudzha. TurkStream the only other pipeline still in operation supplies gas to Russia ‘friendly’ nations
Russia stopped publishing total gas production numbers in August. At that point, YTD output was down 171 Mcm/d. However, in Q3 it was down a whopping 380 Mcm/d. By comparison, Gazprom alone is down 214 Mcm/d YTD, which hints at smaller producers having more trouble @ira_joseph
++Charts via KnovaWave @knovawave RonH @RonH999 – Visit Ron for daily updates
Sources: TradersCommunity, EIA, RonH Energy, KnovaWave, Argus
From The TradersCommunity US Research Desk