Global natural gas prices soar as Russia shortfalls continue, TTF tops €200/MWh
Quantum Commodity Intelligence – European natural gas prices topped €200/MWh Tuesday for the first time since early March, helping lift global gas prices after Russia said it would cut gas deliveries along the Nord Stream 1 pipeline to just 20% of capacity.
Moscow claimed Tuesday that one of the turbines that was sent to Canada for maintenance has yet to be returned, while a second unit is faulty. But European leaders have consistently questioned the Kremlin's motives, saying the cut in supplies is primarily aimed at scuppering Europe's plans to go into the peak winter season with 80% of storage capacity full.
Benchmark TTF gas prices surged 13% Tuesday for the Aug22 contract to close at €199.91/MWh compared to the day's high of €214.55/MWh and mid-June levels of €80/MWh, while Dec22 was up by 13% to close just shy of €203/MWh.
Both contracts have gained around 30% in less than a week and now stand above $350/b in oil terms.
In a separate development Tuesday, EU member states reached an agreement on a voluntary reduction of natural gas by 15% this winter.
However, member states whose electricity grids are not synchronised with the European electricity system and are heavily reliant on gas for electricity production are also exempted to avoid the risk of an electricity supply crisis.
LNG prices have also spiked in Asia this week. While the latest European rally came after Asian markets had settled, sources said Japanese and South Korean buyers currently hunting spot cargoes would need to pay around $50/mmBtu to have any chance of competing with Europe.
UK natural gas prices were up around 10% on Tuesday, with the Aug22 NBP (National Balancing Point) contract trading at 352 pence per therm (p/th).
In the US, Henry Hub prices were slightly up on the day as heatwave conditions over the country also boosted demand. The front-month Aug22 contract was trading just below $9/mmBtu early afternoon eastern time, having hit fresh 14-year highs of $9.75/mmBtu earlier in the session.
The August contract had slumped after last month's shutdown of the Freeport export terminal, tumbling to around $5.50/mmBtu in the first week of July.
