European gas prices were mixed again yesterday, torn between more comfortable spot fundamentals and concerns on future supply as European officials consider more sanctions against Russia. In particular, European Council President Charles Michel said that the EU will need to take action on Russian gas imports “sooner or later”. Meanwhile, breaking ranks with EU, Hungary said ready to pay for Russian gas in rubles.
On the pipeline supply side, Russian flows increased slightly yesterday, averaging 261 mm cm/day, compared to 258 mm cm/day on Tuesday. Norwegian flows weakened to 324 mm cm/day on average, compared to 329 mm cm/day on Tuesday, as outages at the Sleipner and Gullfaks fields continue to limit output.
At the close, NBP ICE May 2022 prices dropped by 2.820 p/th day-on-day (-1.16%), to 239.420 p/th. TTF ICE May 2022 prices were down by €1.77 (-1.63%), closing at €106.791/MWh. On the far curve, TTF ICE Cal 2023 prices were up by €1.46 (+1.98%), closing at €75.195/MWh.
In Asia, JKM spot prices dropped by 0.03%, to €100.885/MWh; May 2022 prices increased by 0.05%, to €104.748/MWh.
Coal prices stabilized yesterday, maintaining the maximum coal switching level around €92/MWh. Despite their yesterday’s drop, TTF ICE May 2022 prices are still far from that level. But they are on track as they are still below the 20-day average. The main risk weighing on this bearish scenario is the level of Asia JKM prices. If Asian buyers do not lower their bids, European prices will not keep their downtrend because Europe cannot afford a drop in its LNG supply.
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