Prices up after certification procedure of Nord Stream 2 AG was suspended

European gas prices increased strongly yesterday, supported by the Germany’s energy regulator (the Bundesnetzagentur) to suspend the procedure to certify Nord Stream 2 AG as an independent transmission operator, which brings new uncertainty over when the pipeline will begin commercial operations. The rise in Asia JKM prices (+8.82%, to €102.492/MWh, on the spot; +0.42%, to €95.296/MWh, for the December 2021 contract; +15.12%, to €114.085/MWh, for the January 2022 contract) kept the bullish movement going as it shows Asian buyers are currently not ready to leave to their European counterparts the few LNG cargoes available. Moreover, the LNG market was disturbed yesterday by the closure of one of the three trains of the Australia Gorgon LNG liquefaction plant after a minor gas leak. As expected, due to a planned maintenance on the giant Troll field, Norwegian flows dropped yesterday, to 327 mm cm/day on average, compared to 346 mm cm/day on Monday. Russian supply was almost stable, averaging 289 mm cm/day, compared to 288 mm cm/day on Monday. 

At the close, NBP ICE December 2021 prices increased by 35.120 p/th day-on-day (+17.15%), to 239.910 p/th. TTF ICE December 2021 prices were up by €14.24 (+17.81%) at the close, to €94.189/MWh. On the far curve, TTF Cal 2022 prices were up by €5.43 (+10.93%), closing at €55.075/MWh, and the spread against the coal parity price (€35.095/MWh, +4.92%) widened significantly.

TTF ICE December 2021 prices broke yesterday the resistance of the 20-day High, chasing Asian prices. The additional increase of the latter is offering them additional support this morning. Some bulls have probably in sight the levels of yesterday’s Asian prices (between the spot and the January 2022 contract). It is possible that prices rise to these levels. But, spark spreads in Japan are now turning negative, which could limit LNG buying by power producers. Moreover, TTF ICE December 2021 prices are about to reach one of our ultimate indicators of overbuying (5-day average above the 5-day High). Therefore, we believe a drop is also likely.