TTF Winter 20 – Summer 21 spread was suppressed throughout the whole second quarter as well as at the beginning of the third one but, starting from August, the former contract has regained premium over the latter. As the withdrawal season was approaching, the price difference reached over EUR0.50/MWh while being assessed -EUR0.25/MWh in the last days of July.
This indicates that the expectations of market participants with regard to trading conditions in Q4 20 and Q1 21 are fairly positive now. Strong gas demand for heating makes players believe the worst is over and in case of cold winter even 100pc full storages cannot prevent the market from a sort of rebalancing.
Is there reason for pessimism, though? Of course, there is.
Apart from weather instability, the market is likely to see more LNG delivered to Europe in late 2020 due to better economics and higher seasonal consumption. But what is more important is a threat of Covid-19 second wave which can hit the regional demand making the spreads reverse once again.
Currently, many players do not take seriously such a risk but the situation may change rapidly, as demonstrated by all the restrictions put in place nearly simultaneously earlier this year.
Source: Yakov Grabar
See original post by Yakov on LinkedIn