Thread by @Hoarau_J

THREAD: TTF month-ahead prices jumped from a low at €23/MWh early June to an intraday high at almost €50/MWh yesterday. In the weekly @Energyscan_egm podcast, I discuss about the main drivers behind this spectacular rebound #gas #LNG #ONGT 1/10
open.spotify.com/episode/3905lU…

First element behind the rally has been the reduction in #LNG supply to Europe, following the drop in TTF prices below Asian spot LNG prices that opened some arbitrage opportunities. Nevertheless, Europe LNG supply still sits at healthy levels. 2/10

Then the planned outage affecting the Nyhamna gas processing plant in #Norway with a 80 mm cm/day impact on export capacity has been extended twice: by a week on June 9 and then by 24 days on June 13. 3/10 umm.gassco.no/details?id=385…

With EU #gas stocks already filled at 73% on average, which remains close to historical high levels for this time of year, and still weak gas demand in Europe in both power generation and industrial sectors, the impact on wholesale prices should have remained rather limited. 4/10

But at the ICE exchange, net positions of Investment Funds (i.e. speculative players) on the TTF reached -60 TWh in the week ending on June 9, their lowest level since Mar-20, meaning that the amount of short positions on the EU gas market had reached a multi year high. 5/10

So after months of steady decline, TTF prices went through a "short squeeze" as a certain number of market players holding short positions were forced to close them quickly, emphasizing the bullish move triggered by LNG and Norwegian pipe supply reductions. 6/10

This jump in TTF prices has two main fundamental implications. 1st, the competitiveness of gas for power generation has deteriorated as TTF prices went from below the coal-to-gas switching channel to the lower part of the channel, meaning a potentially slight drop in demand. 7/10

2ndly, US #LNG netbacks to EU are now above netbacks to Asia, meaning that the gross margin generated by US LNG cargo export to EU is higher than an export to Asia. This could lead to an increase in LNG imports to Europe in the coming weeks barring any other supply issue. 8/10

Overall, TTF month-ahead prices are now back to €35/MWh, with strong intraday volatility. Watch out for developments in the Norwegian maintenance program and moves in LNG cargoes in the coming days! 9/10

Want to stay up-to-date on energy market trends? Check out our @Energyscan_egm platform here: energyscan.engie.com 10/10