Wholesale market reacts to low EU gas storage levels
The freezing temperatures and lacklustre wind generation combined with rapidly depleting EU storage levels to propel NBP gas prices higher on Monday.
Following a brief respite, temperatures across much of Northwestern Europe are expected to dip back below average across week 48, resulting in substantial gains of more than 3.25p/therm (0.11p/kWh) being posted on the December 24 front-month contract.
At the same time, the latest run of our 14-day model indicates that demand will rise back above seasonal norms from Wednesday 27th before easing slightly moving into December.
Low temperatures and a lack of wind generation seen across much of November has combined taken a significant toll on European storage levels. According to data from Gas Infrastructure Europe, aggregated EU stocks are currently 87.68% full. This is down by just over 10 percentage points when compared to the same date last year [97.79%], with almost 7(%) of which having been lost so far in November.
Reports of US sanctions against Russia’s major Gazprombank may have served as an additional source of support for curve contracts. Currently, most EU countries still receiving Russian gas and oil, or generally, countries that Russia deems to be ‘unfriendly’ must make payment in Rubles via Gazprombank so it’s unclear if these more specific sanctions placed on the banking group may put some of the last Russian flows into the EU at risk.
In other news, Australian LNG producer Woodside has shut down its Pluto export plant in the west of the country due to an unplanned outage, citing urgent maintenance that has an as yet uncertain duration.
This morning, the market has already experienced elevated volatility with key contracts having initially been offered at a discount of more than 2p/therm (0.07p/kWh) though the majority are now being offered slightly higher than their previous settlement at time of writing.
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Price commentary courtesy of Crown Gas and Power 