AndreasStenoLarsen Profile picture
Oct 24 β€’ 13 tweets β€’ 4 min read
A sudden MATERIAL oversupply of Gas in Europe.

Could prices go to 0? 🀯 A thread 1/n
Fill levels in European gas storages are above 90% and in the major re-gasificaiton hubs of France, Italy and Spain, storages are even closer to 100%

European countries "mail-ordered" massive amounts of Liquid Natural Gas after the European Comission asked countries to move ahead of the curve in June

But suddenly there is no where to place the gas arriving via the sea in France, Italy and Spain

Currently LNG trades with a discount to TTF and PVB as there is a load of LNG ships waiting to off-load..

The amount of LNG stored at ships is rising FAST (see chart) and unless the temperature drops around Europe, it will be tricky to off-load any time soon..

The price of storing LNG at ships is also going bananas as operators hope that the net demand/supply balance will flip in 3-4 weeks from now when the heating season kicks in..

The issue is that there is an ongoing net injection in to storages still as the temperature level is above normal and with fill levels approaching 100% around Europe, the issue of LNG oversupply is likely going to intensify in the coming 2-3 weeks.

The weather forecast for 1 Nov still points to >15 degrees celsius across the European continent way above usual averages, which hints that the over-supply will continue another week or two at least

As commodity markets need to discount prices based on physical constraints, the front-end (1st position in orange) drives the price action across the curve..

An over-supply short-term is going to drag the whole curve lower!


1) Storages are close to being filled 100%
2) Prices to store LNG at ships is sky-rocketting
3) The weather forecast remains mild

Don't rule out prices close to 0 soon

You can follow my updates for FREE on a running basis right here.

Best wishes for the week from Andreas

I will interview @BurggrabenH on European Energy later today at @RealVision .. Let us know if you have any questions that you would like us to address

Alexander Stahel is one of the best at assessing the numbers behind the supply/demand balance in Europe. Stay tuned

Before all the doomsters lose their temper. I am WELL aware that this is a short-term story
Or negative, oooops

β€’ β€’ β€’

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More from @AndreasSteno

Oct 25
Hallelujah! Natural Gas prices traded in negative territory yesterday. Is this the end of the crisis?

The answer is NO. Here is a thread why.. 1/n
Prices have dropped materially due to a short-term oversupply as European storage facilities are almost full, in particular in re-gassification countries such as Spain and France

Natural Gas prices even traded in NEGATIVE territory for the hour ahead yesterday.. Fun times!

2/n Image
But does that mean that we call off the crisis? The answer is no as the flow situation is still much worse than in 2021 for example.

The current gas flow is down roughly 25% versus normal despite increased flows from Norway and from LNG (US, Qatar etc) this year

3/n Image
Read 7 tweets
Oct 22
How are traders positioned aross assets? πŸ’²πŸͺ”πŸ“ˆ

Your weekly overview .. A thread 1/n
FX Markets first πŸ’²

No major changes to the massively long USD position over the past week, while there has been net EUR buying by non-commercial accounts.

The JPY positioning is getting shorter again (for good reasons)

Let's take a closer look at the JPY after a crazy week. Up until Tuesday traders increased bearish JPY bets but we are far from the bearishness seen in early 2022

The JPY positioning is short, but not as extreme as seen before. The intervention doom loop is still in place

Read 10 tweets
Oct 21
Commodity- and energy prices are falling despite scarce supply, which is a clear signal for the economy πŸͺ” ..
Here is a thread 1/n
Natural gas is down more 20% over the past week and even more so in certain markets in Europe and it is hard to find any commodities in an uptrend right now

2/n Image
I have been on the short side on the commodity complex for a while with a pretty decent return and interestingly the market is still net LONG most commodities

The darker the red the "longer" the market positioning

3/n Image
Read 11 tweets
Oct 21
The BIGGEST interest rate shock in modern history. A thread on how bad things can get. πŸ“‰πŸ€―πŸ’² 1/n
Let’s start with the broader economy. This is the largest move in the yield curve since the mid-1980s and certainly the biggest move in the era of financialized economies

The move suggests that ISM will print at index 30 in Q4 2023. A material recession is likely upcoming

What does it mean for equities?

The move in the 10yr real rate is the worst seen in decades. 10yr real rates suggest forward P/Es should trade around 11 implying a level of 2700 in S&P on UNCHANGED earnings assumptions

That is a drop of more than 30% from current levels

Read 7 tweets
Oct 19
Inflation is rolling over in right about every category but one in the US.. πŸ“ˆπŸ“‰ A thread 1/n
πŸ‡ΊπŸ‡Έ Let's start with the supply chain crisis that everyone central banker and their mother referred to in 2021

Freight rates have fallen off a cliff and this is usually a strong hint that goods inflation will slow fast as well

Here is US freight rates vs US goods inflation

πŸ‡¨πŸ‡³ Chinese freight rates went for the moon during the pandemic, but they have returned to mother earth lately and this is probably the most disinflationary chart you will see today

Shanghai freight rates tend to lead western good prices by 6 months

Read 11 tweets
Oct 19
Gas- and electricity prices are dropping FAST in Europe right now and they are likely going to drop further!

What is going on? πŸ’²πŸͺ”A thread 1/n
Nat Gas prices have dropped from >300 EURs pr MWh to levels just north of 50 EURs and day ahead prices are even lower in many areas of Europe

Prices in Spain have dropped as low as 27 EURs pr MWh for Gas as there is currently a queue of ships waiting to off-load outside of Spanish LNG ports

Read 13 tweets

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