2023-09-16 09:58:00
While the current developments in the crude oil markets – due to the continuous rise in prices in recent weeks – are at the center of attention of analysts and investors, the developments in the natural gas markets, a particularly important source of energy for Europe, do not attract similar interest. The spot price of natural gas at the largest pan-European trading hub, the TTF in the Netherlands, has been on an upward trajectory, with periodic fluctuations, since the beginning of June, when it reached its lowest level in 23 months (23.1 euros/MWh). The upward trend is primarily due to stockpiling ahead of winter, in order to achieve the target of 90% filling of warehouses on November 1, while the fluctuations come from seasonal factors.
Indicatively, the sharpest rise in the current period is mainly due to the prolonged maintenance work at the Troll field in Norway, the 5th most important supplier to the EU. in 2022, as well as the strike at Chevron’s LNG facilities in Australia, which provide 6% of the world’s LNG supply.
Under these effects, the spot price at the TTF hub is in mid-September at 35.5 euros/MWh, 53.7% higher than the low level of last June and 141.5% above September 2019, before the pandemic. However, compared to the beginning of 2023 and the same period last year, it is 51.5% and 81.0% lower, respectively.
The dynamics of economic activity are expected to have a significant impact on natural gas prices in Europe in the near future, with the possibility of growth remaining at a sluggish pace in the second half of this year the most likely, as well as the level of inventories ahead of winter.
The mid-September warehouse fill rate stands at 93.9%, up from 84.1% a year ago, exceeding the aforementioned November 1 target. The particularly high level was achieved thanks to certain factors, such as the mild previous winter, which allowed at the end of the heating season (March 31) a degree of filling of 56%, and the results of efforts to diversify the EU’s energy supply, under the plan REPowerEU.Important developments include the expansion of imports from the USA, which corresponded in 2022 to 85.7% of their reduction from Russia, as well as from Norway and Azerbaijan.
* EUROBANK RESEARCH
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