TTF gas futures surge 24% on US terminal blast, lower NS1 flows

15 Jun 2022

Quantum Commodity Intelligence - European TTF natural gas futures surged above €120/MWh for the first time since early April on Wednesday, amid reduced US and Russian supplies.

Dutch TTF futures for July settled up 24% at €120.33/MWh ($115.87/MWh) in volatile European trade Wednesday, with prices at one point rallying by around 50% since Freeport announced Tuesday that the Texas LNG export terminal would remain closed for several months.

The Jul22 TTF contract peaked at €121.735/MWh Wednesday, compared to under €80/MWh before the Freeport announcement. 

Germany's Siemens Energy said Tuesday that gas turbines it supplied to Russia's Gazprom to help compress gas on the Nord Stream 1 pipeline had been held up by Canadian sanctions after undergoing maintenance in Montreal, which Russia said is impacting gas flows. 

Gazprom said it could only ship 100 million cubic meters/day on the Nord Stream 1 pipeline, or 40% less than the system's capacity, until the gas turbines are returned from Canada, with volumes set to fall even further. 

European gas prices were already underpinned as flows along the Nord Stream 1 pipeline, with Russia cutting supplies to Denmark and the Netherlands as part of a wider row over rouble-denominated payments.

TTF also posted strong gains along the forward curve, with the key winter Nov22 contract trading above €120/MWh Wednesday afternoon in Europe, the highest since March.

In Asia, the Aug22 JKM swaps closed up nearly 20% on Tuesday at $27.735/mmBtu, the highest settlement for the August contract in almost two months.

The Freeport LNG export terminal, which was hit by an explosion last week, announced Tuesday an extended shutdown with the plant likely to be offline for months and not fully operational until the end of the year.

"This will affect Europe above all, which has recently been taking 75% of US LNG exports," said Commerzbank in a client note Wednesday.

By contrast, US natural gas prices plummeted on the Freeport news, with the US losing around 20% of its LNG export capacity.