Prices down on hopes of higher Russian supply

European gas prices weakened yesterday, pressured by more comfortable spot fundamentals (above-normal temperatures, higher LNG supply). Moreover, on the pipeline supply side, Norwegian flows rebounded to 328 mm cm/day on average yesterday, compared to 311 mm cm/day on Tuesday. Russian flows were also higher, to 262 mm cm/day on average, compared to 256 mm cm/day on Tuesday. The drop in Asia JKM prices (-4.17%, to €95.945/MWh, on the spot; -0.95%, to €99.698/MWh, for the December 2021 contract) and in parity prices with coal for power generation (the decline in coal prices offset the slight increase in EUA prices) also exerted downward pressure.

At the close, NBP ICE November 2021 prices dropped by 3.000 p/th day-on-day (-1.35%), to 218.590 p/th. TTF ICE November 2021 prices were down by €1.67 (-1.89%) at the close, to €86.819/MWh. On the far curve, TTF Cal 2022 prices were down by 71 euro cents (-1.29%), closing at €54.815/MWh, and the spread against the coal parity price (€34.153/MWh, -0.88%) narrowed slightly.

Yesterday, around the close, the market heard the news that President Putin had told the head of Gazprom to start pumping gas into European gas storages (in Germany and Austria) once Russia finishes filling its own stocks, which may happen by November 8. The news amplified the decline in TTF ICE November 2021 prices which were already under pressure. For its last day of trading, the contract sees its price fall again this morning, even breaking the supports of the 5-day Low and the 20-day Low, with higher Norwegian flows (341 mm cm/day this morning) and the additional drop in China coal prices also exerting downward pressure. Beware, however, of a possible technical rebound.