Uncertainty around the future of Russian gas pipeline deliveries to Austria fuels the TTF

Executive Summary

European TTF front-month price outlook: Bullish ▲

Kpler Insight anticipates the TTF front-month contract will increase in the coming week due to high uncertainty around the continuation of Russian gas deliveries to Austria after OMV’s announcement yesterday. Regarding fundamentals, lower-than-average temperatures are forecast towards the end of next week, and strong wind output in NW Europe is expected to balance out the region’s gas needs for power and heating purposes.  

Asian LNG front-month price outlook: Steady

Kpler Insight projects Asian front-month prices to remain stable for the coming week. We view, although some colder weather is expected in Northeast Asia, healthy inventory levels from recent mild temperatures and robust spot supply into the region will keep prices balanced again for the week ahead.

US Henry Hub front-month price outlook: Steady

Henry Hub prices increased by more than $0.20/MMBtu over the week, even managing to break the $3.00/MMBtu mark for a brief time. Front-month prices rallied on producer discipline and offshore production outages keeping supply under 100 Bcf/d and the addition of more heating degree days to the winter forecast.

Daily natural gas and LNG prices ($/MMBtu)

Source: ICE, NYMEX, Spark Commodities. Brent-indexed price represents 12% slope of 90-day moving average of Brent front-month contract. Netforward calculation is 115% Henry Hub front-month contract plus spot fixture shipping and regasification costs into Gate (Spark Commodities).

US front-month arbitrage to Asia - Cape of Good Hope vs Panama Canal

Source: Spark Commodities, incorporating ICE-listed Spark Freight and Spark Cargo products. For a full M+12 forward curve and netback cost breakdown, contact Spark at info@sparkcommodities.com.

Price movement definitions

Steady – front-month prices move in a 20 cents/MMBtu upside/downside range

Bearish – front-month prices decrease by more than 20 cents/MMBtu

Bullish – front-month prices increase by more than 20 cents/MMBtu