Prices up again on colder weather and ongoing weak Russian flows

European gas prices continued their rebound yesterday, supported in particular by colder weather and ongoing weak Russian flows. Indeed, Russian supply was stable at 183 mm cm/day on average yesterday, with Yamal flows through Poland still at 0 and flows through Ukraine well below their December levels. Norwegian flows weakened slightly, averaging 349 mm cm/day, compared to 352 mm cm/day on Monday. Concerns on a possible ban of Indonesia coal exports in January seemed to have also lend support, with a rise in both coal prices and Asia JKM prices (+26.05% on the spot, to €89.192/MWh; +7.43% for the February 2022 contract, to €99.008/MWh).

At the close, NBP ICE February 2022 prices increased by 45.930 p/th day-on-day (+26.92%), closing at 216.570 p/th. TTF ICE February 2022 prices were up by €8.31 (+10.33%), closing at €88.741/MWh On the far curve, TTF ICE Cal 2023 prices were up by €3.19 (+7.11%), closing at €47.995/MWh.

As expected, TTF ICE February 2022 prices rose yesterday inside the 5-day range, closing above the 5-day average. They are up again this morning, trading around the 20-day Low. As a reminder, their “normal” path is to trade inside the 5-day range, with the latter lying inside the 20-day range. This condition suggests prices should trade today in the zone around the 5-day High and the 20-day Low. More fundamentally, Indonesian authorities will decide today whether or not to maintain the coal export ban. As coal supplies to domestic power plants improved in the past days, it seems a full month ban could be averted. This is the scenario currently priced by the market. A stronger ban would push prices above the 20-day Low (ie faster than expected).