Prices maintain their downtrend

Prices were down again yesterday in most European gas markets, pressured by the increase in pipeline supply. Indeed, Norwegian flows rebounded, averaging 305 mm cm/day, compared to 269 mm cm/day on Friday. Russian flows were also higher, at 220 mm cm/day on average, compared to 209 mm cm/day on Friday. The drop in coal prices provided additional downward pressure.

At the close, NBP ICE May 2022 prices dropped by 18.000 p/th day-on-day (-10.50%), to 153.390 p/th. TTF ICE May 2022 prices were down by €2.04 (-2.15%), closing at €92.837/MWh. On the far curve, TTF ICE Cal 2023 prices were down by €1.64 (-2.00%), closing at €80.136/MWh.

In Asia, JKM spot prices dropped by 4.75%, to €78.455/MWh; June 2022 prices increased by 0.38%, to €80.900/MWh.

The drop in coal prices drove the maximum coal switching level down to €96/MWh (compared to €100/MWh on Friday), offering downside potential to TTF ICE May 2022 prices. They are slightly rebounding this morning, but the upside potential seems limited. Until now, the maximum coal switching level played the role of support. But, given the improvement in spot fundamentals (as the strong increase in stock levels shows), it tends to play the role of resistance. And the support is now the average coal switching level. Currently at €73/MWh, the latter may seems difficult to reach for TTF ICE May 2022 prices. But some European day-ahead prices are already trading below this level. Therefore, if no fundamental element reverses the current trend, TTF ICE June 2022 prices could drop to this average coal switching level (almost equal to the 1-Year average).