Market sentiment dominated by the cut in Russian deliveries to Poland and Bulgaria

Prices increased again yesterday in most European gas markets. As expected, Russia suspended yesterday deliveries to Poland and Bulgaria after they refused to pay for supplies in rubles, raising concerns more European customers could be cut off. However, total Russian flow were up yesterday, averaging 223 mm cm/day, compared to 207 mm cm/day on Tuesday, probably because some other long term buyers increased their offtakes as a precautionary measure. On their side, Norwegian flows dropped slightly, to 303 mm cm/day on average, compared to 305 mm cm/day on Tuesday.

It is important to note that on the UK market, very little dependent on Russian gas and having a strong supply of LNG, NBP prices were down.

At the close, NBP ICE May 2022 prices dropped by 13.920 p/th day-on-day (-8.51%), to 149.640 p/th. TTF ICE May 2022 prices were up by €4.22 (+4.09%), closing at €107.427/MWh. On the far curve, TTF ICE Cal 2023 prices were up by 56 euro cents (+0.69%), closing at €81.403/MWh.

In Asia, JKM spot prices increased by 16.58%, to €73.603/MWh; June 2022 prices increased by 1.37%, to €81.287/MWh.

Despite a strong push, TTF ICE May 2022 prices failed to close above the 5-day High yesterday. The market must consider that as long as the cut in Russian flows is not extended to other countries, there is no need to panic, in a context where stock levels have improved markedly and LNG supply remains high. Prices are weakening this morning, but the 5-day average is lending them support. As we mentioned in our Gas & Coal Weekly Report published this morning, TTF ICE May 2022 prices probably won’t have time to print a significant drop as the contract expires today. But, TTF ICE June 2022 prices will have time to come back inside the coal switching range (the maximum is currently at 92/MWh), and even to reach the average coal switching level (currently at 70/MWh) if Russian supplies are not cut further.