Prices extended losses

European gas prices extended losses yesterday, still pressured by weak demand and strong LNG supply. The drop in coal prices (-4.37% for API2 1^st nearby prices, -5.89% for Cal 2023 prices) provided additional downward pressure. On the pipeline supply side, Norwegian flows dropped to 311 mm cm/day on average yesterday, compared to 320 mm cm/day on Friday. Russian flows were almost stable, averaging 261 mm cm/day, compared to 260 mm cm/day on Friday.

At the close, NBP ICE June 2022 prices dropped by 8.790 p/th (-6.39%), to 128.710 p/th. TTF ICE June 2022 prices were down by €7.92 (-7.79%), closing at €93.787/MWh. On the far curve, TTF ICE Cal 2023 prices were down by €5.29 (-6.35%), closing at €78.052/MWh.

In Asia, JKM spot prices dropped by 13.69%, to €65.043/MWh; June 2022 prices dropped by 3.68%, to €74.854/MWh.

The drop in coal prices pulled the maximum coal switching level to 97.68/MWh yesterday (compared to 102.37/MWh on Friday). The next fundamental level is the average coal switching level, currently at 74.45 /MWh, and which is very close to the 20-day Low. Before they get there, TTF ICE June 2022 prices will have to break first the technical support of the 5-day Low. They seem on track as they are down again this morning. But as we have repeated several times, all of this remains conditional on two key fundamental factors: the continuation of a strong LNG supply in Europe and the continuation of Russian gas deliveries.