EU Natural Gas (TTF)

November 6, 2020

The Research Team reviews the EU Natural Gas (TTF) market

 

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6 November 2020

  • The spot supply continues to be below average (10% deficit on a multi-year average and almost -20% on a YoY basis). Both the Russian and the Norwegian flows show figures well below the level observed 12 months ago. The LNG volume increase continues to struggle. The observed LNG send-out back in week 45 2019 would shame the current levels of LNG imports which are -60% down on a YoY basis. Storage levels have flattened out and are currently at 93/94%, a few % down relative to the same time last year.
  • High pressure will be the dominant theme for the next 10 days at least. The cell will be centred over Scandinavia and expand towards most of the continent. This will have two main effects. First, a net decrease in winds and precipitations (making our gas/wind spread for power generation jump in positive territory). Second, it will push temperatures anomalies back in positive territory, dumping the heating demand. Gas has become increasingly less profitable relative to a few weeks / months ago at the expense of thermal coal. This may have negatively affected and could continue to affect the underlying demand.
  • The overall figures for October have been leaning towards a positive outlook, with our macro indicators holding on and even edging higher (see the country-weighted PMI or the Business Expectation Index). However, lockdown measures have gradually become more stringent and there is possibility the demand may be partially affected. We hereby argue that the net deficit should be relatively small, partially because of the nature of the current lockdowns (lighter relative to those in Spring), but also due to different season of implementation (peak in Winter vs. exit from Winter).

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