Mixed price evolution

European gas prices were mixed yesterday. They received (moderate) support from lower pipeline supply. Indeed, Russian supply dropped to 210 mm cm/day on average yesterday, compared to 257 mm cm/day last Friday, as flows into Germany (through Poland) at the Mallnow interconnection point stopped from Sunday and have been switched to reverse. However, Poland’s gas monopoly said it continued to receive contractual volumes from Gazprom in full. Norwegian flows were up, averaging 340 mm cm/day on average yesterday, compared to 326 mm cm/day on Friday. But the additional drop in Asia JKM prices (-3.40%, to €83.207/MWh, on the spot; -3.03%, to €85.862/MWh, for the December 2021 contract) and in parity prices with coal for power generation (both coal and EUA prices were down) contributed to exert downward pressure.

At the close, NBP ICE December 2021 prices increased by 1.490 p/th day-on-day (+0.90%), to 167.470 p/th. TTF ICE December 2021 prices were up by 75 euro cents (+1.16%) at the close, to €65.619/MWh. On the far curve, TTF Cal 2022 prices were down by €1.01 (-2.21%), closing at €44.485/MWh, and the spread against the coal parity price (€29.983/MWh, -3.25%) remained almost stable.

The swing in Russian flows fueled strong volatility from Friday. But overall, despite their yesterday’s rebound, TTF ICE December 2021 prices remain below their 5-day Low support. Given the uncertainty on Russian supply, a price rebound is likely, particularly as prices are about to be strongly oversold (5-day average below the 5-day Low).