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TTF trades below €40/MWh for first time since July 2021

  • Märkte: Natural gas
  • 21.03.23

The TTF front-month contract, Europe's benchmark price, on Monday traded below €40/MWh for the first time since July 2021, as relatively mild weather and demand reduction has allowed Europe to maintain unseasonably high storage stocks.

Argus assessed the TTF front-month price at €38.90/MWh on 20 March, the lowest for any day since 27 July 2021 (see price graph).

European gas hub prices have fallen steadily since around mid-December, as a largely mild winter has cut into heating demand, while gas prices have been sufficiently high to reduce gas burn by households, industry and the power sector. EU gas consumption fell by 19.2pc in August 2022-January 2023 compared to the five-year average for the period, while the EU's earth monitoring programme Copernicus stated that the Boreal winter months of December-February were the second-warmest on record in Europe.

Sendout from European LNG facilities has also been brisk compared to previous years, buoyed by weak demand in Asia, which has allowed Europe to continue receiving large numbers of cargoes from the US. Aggregate sendout from EU facilities, excluding the UK, has averaged just over 3.7TWh/d on 1 January-20 March, drastically above the three-year average for the period of 2.6TWh/d.

This has weighed on storage withdrawals, eroding concerns about a possible shortage this winter, even as Russian flows to Europe have been low. EU gas storage inventories stood at just under 56pc of capacity yesterday morning, according to the latest data from the GIE transparency platform, well above previous years except 2020 (see stocks graph). EU stocks had been at roughly 26pc of capacity on 20 March last year.

Despite the drop in prices, the return of industrial gas-demand is likely to be gradual as many commodity markets are still taking a wait-and-see approach amid weak macroeconomic conditions and high imported stocks across several sectors, such as refined products and fertilisers.

Gas demand, particularly in northwest Europe, could pick up due to higher heating demand in the next month, however, as weather predictions today show average temperatures across Germany, the Netherlands and France falling below seasonal norms for most of April, particularly in Germany, the continent's largest consumer. That said, temperatures are expected to hold above or even with the average for most of April in Spain and Italy, two other of the largest five consumers in the EU.

EU stocks TWh

TTF front-month price 2021-present €/MWh

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