Bulls keep control of European gas hubs

The combination of a further drop in Russian gas imports at Velke Kapusany (-10 mm cm/day), prospects of a drop in temperatures by the end of next week and the absence of de-escalation signs in the Russia-Ukraine conflict pushed European gas prices higher on Thursday. Gains were more limited on the far curve but strong Brent prices (see oil comment) continued to lend support.

Nominations for Russian gas flows at Velke Kapusany are down 10 mm cm/day again this morning to 44 mm cm/day, compared to a physical flow at 77 mm cm/day on Tuesday. Temperature forecasts for the end of next week were revised slightly colder again overnight, pointing to a drop below seasonal norms across Western Europe. Nevertheless, strong wind speeds should continue to limit demand from CCGTs in the very short term in Northwestern Europe whereas poor hydro generation could continue to maintain high CCGT generation in Spain and Italy. On the Russia-Ukraine-NATO conflict side, the French President Emmanuel Macron announced this morning that he will travel to Russia and Ukraine on Monday and Tuesday after several phone calls with Putin and Zelensky this week, in an attempt to find a peaceful outcome to the crisis. Overall, we favor a stable to bullish outlook for European gas prices today.