19 November 2020
- There are not significant changes in the progression of the spot supply for gas. Pipeline flows from both Russia and NW Europe are significantly below the past year levels and the multi-annual mean. The LNG send-out is also very weak and roughly 50% below the values recorded one year ago. While exports will likely continue to favour other macro areas (such as India and East Asia), they have been steadily increasing (particularly from the US) in the past few weeks. Storage levels have been dropping despite the poor demand (see next bullet points), an indirect evidence that supply is indeed tight.
- The strong ridge that affected the weather over much of the continent over the past week has been replaced by a much more zonal regime. On the one hand, this will increase the wind power generation, partially eroding the share of natural gas within the energy mix. On the other hand, however, temperatures will converge towards the norm, hence improving the heating demand. The fossil fuels profile index is suggestive of a significant improvement in the associated margins, which will likely further boost gas demand.
- The slow-moving signal in the macro-economic section is still supportive of a positive price development. Recent PMI figures, for example, indicate a continuation of the recent upward trend (we need to go back to Q318 to observe similar values). However, the high-frequency, short-term signal which is captured by the progression of the Energy Intensity index is much less positive, with a clear flip in direction and the potential to move back in negative territory.