European natural gas futures fell sharply on Monday in the first trading session of meteorological autumn in the northern hemisphere, with tepid demand the main driver.
In continental Europe, the October TTF futures contract fell by 2.9%, from USD 12.89/MMBtu on Friday to USD 12.52/MMBtu on Monday, and was falling further in early trading on Tuesday.
The UK’s NBP – whose trajectory is generally very similar to that of TTF because of the strong physical connections between the two markets – was down 3.2%, from USD 12.62/MMBtu to USD 12.22/MMBtu.
European coal prices took their cue from gas, with API2 down 1.7%, from USD 4.87/MMBtu to USD 4.78/MMBtu.
The falls in European gas prices come despite the approach of the peak annual maintenance season in Norway, which has become Europe’s largest supplier in the wake of Russia’s full-scale invasion of Ukraine. More than half of the maximum export capacity of 360 MMcm/d will be unavailable at times.
This planned maintenance is timed to ensure that all is in order before the start of the winter heating season, so the markets appear to be taking it in their stride, especially as storage facilities are brimming.
The latest data from Gas Infrastructure Europe shows that storage in the European Union was 92.43% full as of Sunday, the first day of autumn. UK storage is also unusually full, at 65.64%.
That said, prices are not far short of their highs for the year and markets remain sensitive to any changes that might affect supply of pipeline gas or LNG.
The month-ahead Brent crude oil price fell by 1.6%, from USD 78.80/barrel to USD 77.52/barrel, but this was because of the expiration of the October contract, with November now the front month. The November contract was up 0.8%, from USD 76.93/barrel on Friday to USD 77.52/barrel on Monday.
While volatility has seen prices sawtooth, the underlying trend over the past week has been downwards.
Markets in the US were closed for the Labor Day public holiday, so there was no trading in the futures contracts for Henry Hub, JKM or WTI.
Labor Day traditionally marks the start of campaigning in earnest in a US presidential election, as adults get back to work and children return to school after the summer vacation. This year’s election on 5 November is now exactly nine weeks away.
The 5 November also happens to be Guy Fawkes Night in the UK – an annual celebration of the thwarting of an attempt to blow up parliament and king James I in 1605 – so expect political fireworks on both sides of “the pond”.
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
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