European natural gas prices continued their robust decline on Wednesday, underscoring perceptions that worries about the cessation of Russian pipeline gas supplies were overdone in the run-up to the expiry of the Ukraine transit contract at the start of 2025.
The February TTF futures contract closed at USD 13.78/MMBtu (EUR 45.56/MWh), down 4.2% from USD 14.39/MMBtu on Tuesday. The decline comes despite freezing weather in much of north-west Europe though the forecasts are for milder weather to come.
In the UK, NBP moved in tandem with TTF, down 4.4%, from USD 14.74/MMBtu to USD 14.10/MMBtu (114.03 p/therm).
In Asia, JKM remained stable, down just 0.3%, from USD 14.27/MMBtu to USD 14.23/MMBtu – meaning that the TTF-JKM spread swung back into positive territory, from minus USD 0.12/MMBtu to plus USD 0.45/MMBtu. This makes Asia a more attractive market than Europe for uncommitted LNG cargoes, subject to shipping costs.
Bloomberg reports that Asian LNG is currently significantly most costly than oil products, creating the conditions for electricity and large industrial consumers to switch from one to the other – suggesting that JKM upside may currently be limited.
In the US, Henry Hub gas remained subject to wild swings on a day when terrifying wildfires engulfed parts of Los Angeles in the state of California, forcing people to flee their homes and causing widespread destruction in some of the wealthiest parts of the city.
Henry Hub was up 5.9%, from USD 3.45/MMBtu to USD 3.65/MMBtu, reversing the sharp fall in the previous trading session.
The Energy Information Administration yesterday published its weekly gas storage data a day early because today is a national day of mourning for former President Jimmy Carter.
The data shows a withdrawal of 40 Bcf for the week ending 8 January, taking stocks to 3,373 Bcf, 3 Bcf lower year-on-year and 207 Bcf above the five-year average of 3,166 Bcf.
The rally in crude oil prices ran out of steam after a fortnight during which price rises have vastly outnumbered price falls.
Brent crude futures were down 1.2%, from USD 77.05/barrel to USD 76.16/barrel, still well outside the range within which they were trading in the final weeks of 2024. WTI was down 1.3%, from USD 74.25/barrel to USD 73.32/barrel.
European carbon prices continue to fall from recent highs, in line with gas prices. EU carbon dioxide emissions allowances were down 2.5% on Wednesday, from EUR 72.10/tonne to EUR 70.28/tonne.
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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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