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    TTF slumps to lowest level since Dec 2021

Summary

The slump occurred despite a cold snap hitting Europe this week, as the impact of an increase in heating use was more than offset by ample LNG supply and overall demand remaining subdued.

by: NGW

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TTF slumps to lowest level since Dec 2021

The front-month TTF gas contract plummeted on January 16, bottoming out at 55.4/MWh ($639/'000 m3) at around 14:45, according to ICE data, marking its lowest level since December 2021.

The slump occurred despite a cold snap hitting Europe this week, as the impact of an increase in heating use was more than offset by ample LNG supply and overall demand remaining subdued, as prices are still very high compared with previous years. China saw record low growth in LNG demand last year, and this has resulted in cargoes being delivered to Europe instead.

HSBC notably slashed its 2023 forecasts for the price of gas traded in Europe last week by about 30% and its prediction for 2024 by 20% last week, citing the fact that prices had halved since mid-December.

Russian pipeline gas supply remains at an all-time low, at about 2bn m3/month, or 24bn mon an annualised basis, versus 154bn m3 in . But a steep increase in LNG imports and significant demand destruction has largely offset this. Now that Russian supply is so low, there is limited further downside risk regarding the country's shipments.

Moscow also has suggested that buyers that had their supply cut off last year for failing to pay in rubles would be allowed to pay in foreign currencies stipulated in their contracts instead. This could indicate that the Kremlin is willing to restore that supply, although it did not state this.