Euro TTF gas at two-month highs on Ukraine infrastructure attacks
Quantum Commodity Intelligence – European natural gas prices climbed the top end of the two-month trading range Thursday amid concerns that gas supplies via Ukraine could be disrupted, while the broader geopolitical situation also lifted values.
Front-month May24 TTF futures were trading at just around €29/MWh mid-afternoon in Europe, having been locked in a relatively narrow range of €22-€30/MWh range since early February, the most stable pricing period since Russia invaded Ukraine over two years ago.
However, there are concerns that the escalation in attacks on infrastructure in Ukraine, primarily striking power generation plants, could lead to shortfalls of gas available for Europe.
On Thursday Russia launched aerial attacks across Ukraine, targeting critical infrastructure in multiple regions, including the Trypillia Thermal Power Plant in Ukrainka, just south of Kyiv.
"European gas futures rose over 5% toward €29/MWh, nearing their highest level in two months, driven by fears of attacks on Ukrainian gas storage facilities and escalating geopolitical tensions in the Middle East," said Trading Economics in a client note Thursday.
The report added that Russian assaults on two underground gas storage sites in Ukraine heightened concerns, although operations at the facilities remain unaffected for now.
Gains
However, gains have been capped with storage tanks in the eurozone more than 60% full, according to the latest data from Gas Infrastructure Europe (GIE), while mild weather and increased supplies from Norway ensured there were no shortages of prompt gas.
Enhanced nuclear output from France and healthy wind power generation were also keeping a lid on gas demand.
Last week, Goldman Sachs said recent attacks by Russia on Ukrainian gas storage sites will likely have a bigger impact on next winter's market than on this summer's European gas prices. The infrastructure is part of Europe's incremental supply at times of peak demand.
The investment bank also noted gas shortfalls from Egypt amid higher domestic demand and only sporadic supplies from neighbouring Israel, turning the country from a net exporter of LNG to a spot buyer, at least in the short term.
The key winter TTF contracts for Jan25/Feb25 were both at around €36/MWh on Thursday, gaining €4/MWh, or more than 12%, over the past week.
