Sharp price drop

European gas prices dropped significantly yesterday, both on the spot and the curve. Spot fundamentals were almost unchanged. Significantly below-normal temperatures continued to maintain residential demand at strong levels. On the supply side, both Russian and Norwegian flows were stable, respectively at 332 mm cm/day and 334 mm cm/day on average. The further rise in Asia JKM prices (€50.859/MWh yesterday, +10.79% day-on-day) indicates that Europe will not see a comfortable LNG supply in the near future. But, the market took direction from the upward revision in temperatures for the balance of January and the new national lockdown in the UK. Profit taking, after the technically overbought levels reached recently, provided additional downward pressure.