TTF down on Russian exports, but outlook is uncertain
European natural gas prices are down today as Russian exports to Europe increased 3% over last week, to around 263 MCMD, the highest levels since December 2021.
The TTF benchmark kicked off the week on a bearish note, opening at under $37/Mmbtu, nearly 14% down from Friday’s close of under $43/mmbtu.
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The stability of Russian exports to Europe is far from guaranteed as active fighting has already damaged infrastructure in the Luhansk and Mykolaiv regions.
The Transmission System Operator of Ukraine has also reported damage to the premises of an underground gas storage facility in Chernihiv, raising additional supply questions.
Norwegian flows are slightly down to ~331 MCMD due to planned maintenance at Kollsnes.
Norwegian supply stands out as a stabilizing factor in a violently volatile market: Equinor has expressed its intent to maintain stable gas flows to Europe during this time and has delayed or canceled maintenances in recent weeks.
It also helps that temperature forecasts have continued to climb, offsetting concerns around reduced nuclear output in France.
Oil prices are reflecting a bearish sentiment drawn from expectations of positive developments in the latest round of Russia-Ukraine negotiations scheduled for Monday.
Nevertheless, the key word here is expectations, Russia’s offensive has only intensified over the past few days, and positive outcomes are far from certain.
The prospect of a complete breakdown of these talks continues to represent material upside risk to oil and gas prices.
In the US, there has been an 88% month-on-month uptick in feedgas supply to Venture Global LNG’s Calcasieu Pass facility in Louisiana, which is set to load its third cargo in the coming days.
We understand that this cargo, like both prior cargoes, is to be discharged in Europe.
In Asia, Japan has ramped up spring maintenance of its thermal capacity amid a mild weather outlook, which will likely weigh on LNG demand.
Nevertheless, prices approaching ~$32/Mmbtu may see price-sensitive demand re-emerge, which may result in further bearish developments.
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