European prices up on colder weather and concerns on Nord Stream 2

European gas prices increased strongly yesterday, supported by forecasts of colder temperatures from mid-December. News that the Biden administration was prepared to block the startup of the Nord Stream 2 gas pipeline in the event of a Russian military escalation into Ukraine also provided upward pressure. The rise in Asia JKM prices (+3.31% on the spot, to €104.412/MWh; +2.15% for the January 2022 contract, to €106.230/MWh) helped accompany the bullish momentum. Once again, Summer 2022 prices posted the strongest gains as weak gas stock levels suggest a strong injection season. On the spot pipeline supply side, Norwegian flows were stable yesterday, at 350 mm cm/day on average. Russian supply was almost stable, at 280 mm cm/day on average, compared to 281 mm cm/day on Friday.

At the close, NBP ICE January 2022 prices increased by 13.900 p/th day-on-day (+6.04%), to 243.980 p/th. TTF ICE January 2022 prices were up by  €5.96 (+6.62%) at the close, to €95.883/MWh. On the far curve, TTF Cal 2022 prices were up by €6.43 (+10.84%), closing at €65.736/MWh, with the spread against the coal parity price (€39.562/MWh, +4.06%) widening significantly.

Norwegian flows are down this morning (to 313 mm cm/day on average), due to a combination of planned and unplanned outages. This is lending support to TTF January 2022 prices (they are breaking the resistance of the R1 level). Cal 2022 should follow the rise and continue to reduce the spread (in the worse scenario, Q2/Q3/Q4 2022 prices could rise to Q1 2022 levels, pulling Cal 2022 prices to more than €90/MWh). But, in the very short term, technical selling can still bring them down.