Strongly up for most of the session, prices weakened at the close

European gas prices were mixed yesterday, rising sharply for most of the session before falling back at the close. Strong Asia JKM prices (+13.24%, to €116.064/MWh, on the spot; -1.48%, to €112.397/MWh, for the January 2022 contract) fueled the initial upward movement. On the pipeline supply side, Norwegian flows continued to normalize yesterday, rising to 343 mm cm/day on average, compared to 327 mm cm/day on Tuesday. Russian supply was stable, at 289 mm cm/day on average.

At the close, NBP ICE December 2021 prices dropped by 0.900 p/th day-on-day (-0.38%), to 239.010 p/th. TTF ICE December 2021 prices were up by 82 euro cents (+0.87%) at the close, to €95.004/MWh. On the far curve, TTF Cal 2022 prices were down by 23 euro cents (-0.42%), closing at €54.846/MWh, with the spread against the coal parity price (€35.162/MWh, +0.19%) remaining almost stable.

The drop in TTF ICE December 2021 prices at the close of yesterday could have several explanations: stable JKM January 2022 prices suggesting Asian buyers are not really ready to overbid (the rise on the spot being just an extinction of the contango), technical selling after prices reached one of our ultimate indicators of overbuying (5-day average above the 5-day High)… Prices are weakening again this morning. A drop below the 5-day High or the 20-day High, which are very close, is a possibility. But some bulls may have in sight the 5-day High for tomorrow and take the opportunity to buy the dip, which could limit the downside potential.