Slight price increase

European gas prices rebounded slightly yesterday, still torn between improving stock levels and some concerns on future supply. They received support from  the strong drop in Norwegian flows, down to 303 mm cm/day on average, compared to 325 mm cm/day on Monday, following an unplanned outage at the giant Troll field. By contrast, Russian flows increased to 227 mm cm/day on average, compared to 220 mm cm/day on Monday. The strong rise in coal prices (+10.67% for API2 Cal 2023 prices, to $180.38/t) also helped to fuel the bullish momentum.

Note that EU leaders are set to lay out plans for improving European gas supply security at a summit on March 24-25, with a focus on joint action on gas storage and gas buying. Today, the European Commission (EC) will present new regulatory proposals ahead of the summit that will include mandatory minimum gas storage levels already for the upcoming winter. In a leaked draft, the EC has pushed back a target for filling storage sites to at least 90% of capacity to November 1 instead of October 1, each year.

At the close, NBP ICE April 2022 prices increased by 8.290 p/th day-on-day (+3.68%), to 233.600 p/th. TTF ICE April 2022 prices were up by €2.44 (+2.54%), closing at €98.747/MWh. On the far curve, TTF ICE Cal 2023 prices were up by €1.94  (+3.08%), closing at €65.152/MWh. 

In Asia, JKM spot prices dropped by 3.27%, to €98.955/MWh; May 2022 prices dropped by 1.94%, to €105.750/MWh.

TTF ICE April 2022 prices traded yesterday in a very narrow range, closer to the 5-day average and far from the 5-day Low target. The inability of the short players to reach this target may signal a trend reversal, particularly as this 5-day Low target for today is even lower (€87.70/MWh)… and close to the coal switching range (whose maximum rose strongly yesterday to around €86/MWh). As we don’t think that the European gas balance can afford to increase gas consumption from power plants, prices should remain above this coal switching range. Therefore, we believe prices are now more likely to increase (ie to break the resistance of the 5-day average).