Prices up on lower Russian supply and renewed concerns on Ukraine

European gas prices increased yesterday, supported by a new drop in Russian supply (to 182 mm cm/day on average, compared to 187 mm cm/day on Wednesday) and renewed concerns on Ukraine. The rise in Asia JKM prices (+11.80% on the spot, to €73.202/MWh; +6.34% for the April 2022 contract, to €73.620/MWh) also lent support;  these were probably supported by the closure of Qatargas LNG Train 6 due to an unplanned outage (in addition to the closure of Train 7 a few days earlier). Note however that Norwegian supply recovered to 341 mm cm/day on average, compared to 334 mm cm/day on Wednesday, as the unplanned outage at the Oseberg gas field was fixed.

At the close, NBP ICE March 2022 prices increased by 12.750 p/th day-on-day (+7.64%), to 179.670 p/th. TTF ICE March 2022 prices were up by €5.12 (+7.33%), closing at €74.914/MWh. On the far curve, TTF ICE Cal 2023 prices were up by €1.48 (+2.94%), closing at €51.891/MWh.

Despite their rebound, TTF ICE March 2022 prices did not manage to break yesterday the resistance of the 5-day average. As a confirmation of this slight bearish bias, they are down this morning, to €71.25/MWh currently. An additional drop towards the 5-day Low (€67.34/MWh) and the 20-day Low (€66.17/MWh) targets cannot be excluded. Note that the latter is not very far from the upper level of the spot coal switching level in power generation (currently around €64/MWh). Therefore, both technically and fundamentally (gas stocks are still too low to allow Europe to increase gas use in power generation more than necessary), prices should increase at some point. Of course, the geopolitical situation in Ukraine remains the key game changer.