An incoming cold spell in the US has seen the cost of US gas surge 27% during the past three trading session while (...) Dutch TTF gas contracts remain below €150
Aa
Share
On Saturday we woke up in a cold Europe with heavy snowfall in some regions. As USA Today reports, similar weather conditions are present in across the ocean what once again raises the issue of gas prices which seemingly increased on Monday morning. Courtesy of Ole Hansen (Saxo Bank) we're able to have a detailed look at the the circumstances.
Winter strikes again - the weekend turned out to be cold and snowy in Europe and the USA with more to come. What's ahead of NATGAS (which opened higher on Monday) and Dutch?
Ole Hansen (Head of Commodity Strategy): The current volatility in gas prices, both up and down, and both in the US and Europe, highlights the impact of weather developments. An incoming cold spell in the US has seen the cost of US gas surge 27% during the past three trading session while in Europe the benchmark Dutch TTF gas contracts remain below €150, primarily supported by strong arrivals of LNG and a pick up in nuclear power production in France. The weather outlook points to a colder than normal winter and if realized it will keep gas prices elevated in Europe in order to attract supplies from LNG and to keep demand from consumers and industry as low as possible.
By this time last year gas inventories across Europe had already fallen 162 TWh from its 858 TWh peak. So far this year, the mild start to the autumn supported a strong build up in inventories, and despite the recent surge in demand, inventories has so far only seen a 79 TWh reduction from a 1068 TWh peak. This has left gas in storage, some 40% above the levels seen this time last year, so in other words plenty of gas to go around still, hence the reason why the main pain is currently being played out in the power market where volatility from wind production is causing a great deal of volatility.
