European gas prices failed to extend a three-day rally on Friday, with prices falling amid forecasts for mild weather and increasing wind power generation. Prices are expected to be highly volatile on Monday as the market waits to see if Gazprom books capacity in the latest monthly auctions.
The November-dated TTF and NBP contracts fell by over 8% to end the week, with the UK gas benchmark closing at the equivalent of USD 32.24/MMBtu – USD 0.42/MMBtu higher than the Dutch marker.
Forecasts for mild weather and higher wind power generation weighed on gas prices on Friday.
Ongoing uncertainty over the level of gas exports from Russia to Europe over the coming months helped lift gas prices in Europe earlier in the week.
All eyes will be on the latest monthly capacity auctions – held on Monday morning – as they will give an indication over Gazprom’s gas supply to Europe over November.
The loss on Friday saw TTF and NBP close lower than JKM, with the Asian LNG marker closing 0.2% lower to settle at USD 33.25/MMBtu.
In the US, Henry Hub recorded a loss for the first time in four days, settling 4.9% lower at USD 5.41/MMBtu. Much like in Europe, mild weather and expectations of higher wind power generation hit Henry Hub.
As for crude, prices hit fresh multi-year highs on Friday, supported by ongoing concerns over supply tightness as oil demand continues to recover from the Covid-19 pandemic. On Friday, the Biden administration said it will allow fully vaccinated travels from 33 nations to enter the US from 8 November. The move is expected to boost demand for jet fuel.
Brent and WTI closed ~1% higher on Friday, with Brent settling at USD 84.86/barrel – its highest close since October 2018. WTI closed at USD 82.28/barrel – its highest close since late 2014.
Front-month futures and indexes at last close with day-on-day changes (click to enlarge):
Time references based on London GMT. Brent, WTI, NBP, TTF and EU CO2 data from ICE. Henry Hub, JKM and API2 data from CME. Prices in USD/MMBtu based on exchange rates at last market close. All monetary values rounded to nearest whole cent/penny. Text and graphic copyright © Gas Strategies, all rights.