European LNG sendout figure amended to 4.72TWh/d from 4.59TWh/d
The Netherlands' TTF gas contract for front-month delivery moved below €50/MWh at the end of last week for the first time in nearly a year and a half.
Argus assessed the TTF front-month price at €48.25/MWh on 17 February, the lowest for any day since 27 August 2021. The contract stayed below the €50/MWh mark again at Monday's close.
European gas hub prices have fallen steadily in recent months. 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. This has weighed on storage withdrawals, eroding concerns about a possible shortage this winter even as Russian flows to Europe have been particularly low.
EU gas storage inventories stood at 64pc of capacity yesterday morning, according to the latest data from the GIE transparency platform, well above previous years. EU stocks had been at 32pc of capacity on 19 February last year.
Alongside slimmer demand this winter, strong supply — bolstered by quick LNG deliveries — has allowed firms to preserve storage inventories. Combined sendout from European LNG terminals was 4.72 TWh/d on 1 January-18 February, well above the three-year average of 3.28 TWh/d for the period.
The TTF front-month contract was last around €50/MWh in August 2021, around the time of a fire at Russia's Novy Urengoi condensate processing plant. Russian exports to Europe slowed following the fire, which cut into European storage injections and raised concerns that Russian pipeline exports to Europe would remain low the following winter.
While European gas prices are back around their level in late summer 2021, they are still high in historical terms. The TTF front-month price closed at €16.41/MWh on 17 February 2021.
And there is still upside price risk for the rest of the winter. A sudden stratospheric warming event is under way and has already started to disturb the polar vortex. Weather models suggest that the vortex could become displaced, bringing cold weather to Europe in early March — but it remains unclear how long the cold spell might last.
Short-term forecasts show a turn back to colder weather this week following a mild spell. Overnight lows in London, Essen and Amsterdam were projected on Monday to move below seasonal norms on 23, 25 and 26 February, respectively.
In addition, the TTF winter 2023-24 price has maintained a significant premium to all other TTF prices assessed by Argus, reflecting remaining concerns about supply next winter.
In any case, given prevailing prices it looks increasingly unlikely that the EU's market correction mechanism will be triggered.
The mechanism, implemented on 15 February, is activated when the price of the Ice Endex exchange-traded TTF front-month contract settles above €180/MWh for three working days and is €35/MWh above Acer's LNG reference price.
