European gas prices weakened overall at the close on Friday. They started the session sharply higher, supported by the drop in Russian supply (to 263 mm cm/day on average, compared to 288 mm cm/day on Thursday, to the drop in Yamal flows to the Mallnow entry point). But, as these lower flows were expected (given that Gazprom had not booked daily transportation capacity), the bullish impact has gradually faded, especially because of profit taking, expect for Germany’s newly integrated market area, Trading Hub Europe (THE), more impacted by the drop in Yamal flows.
Note that Norwegian flows were up on Friday, averaging 344 mm cm/day, compared to 340 mm cm/day on Thursday. Asia JKM prices (-1.02%, to €98.605/MWh, on the spot; -0.19%, to €91.440/MWh, for the November 2021 contract) and parity prices with coal for power generation (up thanks to the strong rise in coal prices) sent mixed signals.
At the close, NBP ICE November 2021 prices dropped by 9.920 p/th day-on-day (-3.95%), to 241.260 p/th. TTF ICE November 2021 prices were down by €4.15 (-4.24%) at the close, to €93.625/MWh. On the far curve, TTF Cal 2022 prices were down by €1.02 (-1.78%), closing at €56.468/MWh, still significantly above the coal parity price (€42.584/MWh, +4.23%).
Fundamentals remain bullish and justify the continuation of the uptrend (with the 5-day average as strong support). However, it is not excluded that prices continue the technical correction that started on Friday and come back to the 5-day High (€92.510/MWh for today on the TTF ICE November 2021 contract). But this 5-day High is currently estimated at €96.250/MWh for tomorrow, which could attract new buying interests from financial participants. It remains to be seen whether they will consider that the return is sufficiently attractive and if they believe there are still unhedged physical interests to which they could resell their position.
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