Euro TTF gas climbs to 1-month highs as maintenance season starts

Quantum Commodity Intelligence – European natural gas prices climbed to around one-month highs Tuesday amid scheduled maintenance on Norwegian production and the firmer sentiment for global prices.   

Front-month Jun24 TTF futures were trading just shy of €33/MWh mid-afternoon in Europe, the highest since mid-April for the same contract, although bloated inventories for the time of the year have kept prices in a relatively narrow trading range this month.

"Heavy maintenance at Norwegian facilities is providing support to the market, at a time when we are seeing robust Asian LNG demand. The Troll field and Kollsnes processing plant will be offline today and Wednesday and flows will slowly return to normal towards the end of May," said Warren Patterson, head of ING's commodity research.

Prices have been climbing higher for the past week from lows of around €29/MWh ahead of the maintenance, but the potential risk of delays in turnaround season has helped underpin sentiment.

"These are planned events and so won't come as a surprise to the market. The main concern for the market will be the timely return of these assets which, historically, can be unreliable," consultancy Auxilione said in its daily gas report Tuesday.

Oil and gas maintenance in the North Sea typically takes place over the summer months to avoid Atlantic storms during winter.

Meanwhile, European gas storage currently stands at around 67% full, above the 65% seen at the same stage last year and the five-year average of 53%.

Global

European markets have also been given a lift by the 40% surge in US Henry Hub futures this month, making LNG imports more expensive for European buyers.

Asian JKM prices have also strengthened this month as warmer temperatures boost power demand for air conditioning. Additionally, Chevron's Gorgon processing plant in Australia continues to operate at reduced rates following a technical glitch with one of the liquefaction units.

Benchmark Asian JKM prices for Jul24 closed Monday at $11.50/mmBtu, as prices continued the steady recovery after spot values slumped below $8/mmBtu in the first quarter.

At the same time, equivalent LNG delivered prices for Northwest Europe were valued at $10.25/mmBtu at Monday's close.