TTF natural gas halts price rout, focus returns to Russian supplies

1 Sep 2022

Quantum Commodity Intelligence - European natural gas prices stabilized Thursday after the week’s rout that wiped around a third off the all-time traded highs recorded last week.

Dutch TTF futures for Oct22 slumped to a low of €222.575/MWh Thursday, but recovered to close at €252/MWh, as concerns were raised once again over the restart of the Nord Stream 1 pipeline following maintenance.

Last week the Oct22 contract reached a high of €348.785/MWh on fears Nord Stream maintenance would be used by Moscow as a potential precursor for ongoing Russian supply shortfalls.

At the same time, Nov22 and Dec22 contracts both traded above €350/MWh, before slumping to a low of around €230/MWh Thursday and rebounding to close just shy of €258/MWh.

Prices tumbled as gas reserves in the EU were filled up to 79.4% as of end-August, compared with the target of 80% by 1 Nov, according to data from Gas Infrastructure Europe.

Goldman Sachs also cautioned in an investor note last Friday that the TTF rally had overshot fundamentals.

”However, it still faces a battle to keep filling storage facilities, as Russian gas flows cease," said ANZ commodity strategist Daniel Hynes, commenting as Gazprom commenced a three-day maintenance shutdown of the Nord Stream pipeline on Wednesday.

”Russia’s media reported that maintenance has to be performed on the last operational turbine approximately every 1.5 months. Moscow is also cracking down on payment terms,” added Hynes.

Last week, North Asian benchmark JKM LNG futures for Jan23 and Feb23 closed above $80/mmBtu for the first time but have followed a similar pattern to Europe his week, as winter contract prices settled Wednesday at around $57/mmBtu.