EU Natural Gas (TTF)

December 16, 2020

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

 

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16 December 2020

  • Supply conditions remain very tight. The LNG send-out in particular shows worrying sings of weakness, with the projected figure for week 51 being the lowest this year on a par with week 38. The 2400GWh pales by comparison with the 9500GWh recorded exactly one year ago. Storage withdrawals have been well above average during the past 10 days, a sign that demand was overperforming. Rates of destocking will likely decrease going forward, thanks to the mild weather interlude.
  • South-westerly winds will be the cause of a very mild spell which is however predicted to end before Christmas. Negative HDD anomalies will likely be replaced by positive values (i.e. improving demand) during the last week of 2020, with the potential to persist into the new year. At the same time the wind output will decrease once again, leading to a raise in gas demand for power generation. The latter is also pushed by the preference to burn natural gas at the expense of thermal coal.
  • The macroeconomic signals continue to support a gradual but consistent improvement. Latest figures in Industrial Production back to pre-pandemic levels confirm such a view. While some volatility is still present (see for example the slow down of the PMI index during November), the overall sentiment remains optimistic. Lockdown measures will likely be implemented, at times, during Q1’21 but it is now widely accepted that these have little impacts for the short-term (winter) energy demand.

 

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