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    European gas softens, but market remains nervous


Expanding sanctions against Russia may still impact commodity prices.

by: Rystad Energy

Posted in:

Complimentary, Natural Gas & LNG News, World, Global Gas Perspectives

European gas softens, but market remains nervous

Natural gas markets were flat today, with Russian exports to Europe dropping as flows via the Mallnow pipeline turn East.

In the days to come, TTF prices may also experience downward correction in line with oil prices, which are now back in sub-$100/Bbl territory, driven by some optimism building around the ongoing Russia-Ukraine negotiations and reports of Russian support for the Iran nuclear deal. 


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However, this does not reconcile well with the on-the ground situation in Ukraine, which remains dire with Russian forces pressing closer to the Kyiv city centre.

The EU is also expanding sanctions to include key Russian iron and steel products, new investments in the Energy sector, and remove Russia’s most favored nation status.

Market sentiment continues to be nervous today, with the TTF starting the day at about $35/Mmbtu. Nevertheless, intraday volatility, characteristic of gas markets in recent times, have since pushed prices back up to $40/Mmbtu.

The ~2.8% drop in Russian exports to Europe is likely due to a slight reduction in nominations as the Day Ahead vs. March price spreadon the TTF has narrowed. 

Flows to Mallnow have dropped to zero and have since moved into an Eastbound mode.

Storage volumes in Europe are flattening out at around ~300 TWh, suggesting an imminent start to the injection season, which is likely to be a metaphorical Everest as the continent attempts to rebuild volumes to 90% capacity by 1 October.

We may see slight bullish pressure from temperatures that have been revised lower but remain above normal.

The outlook for wind generation has weakened. 

Sentiment in Asia has also turned bearish due to expectations of a slowdown in Chinese industrial demand after a resurgence of Covid-19 cases that has placed over 30 million people under lockdown.

The market is also seeing bearish attitudes due to the possibility of spot Russian volumes finding a home within the region at discounted prices.

However, further downside may be limited by the expectations of a cold front in Northern China that may push temperatures below normal in coming weeks. 

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.