Natural gas continues its bull run in the new year. TTF Day-Ahead and Front-Month contracts topped 20 EUR/MWh in the first week of 2021, reaching the highest level in nearly two years, let alone LNG market with prices in Northeast Asia rising to record highs.
The beginning of 2021 contrasts sharply with what Europe was going through a year ago. From 1 to 7 January 2020, gas at the regional hubs was not only priced much lower, but also sustained the downward trend set in late November 2019 and not reversed until last May.
What makes the situation this year different from early January 2020, leaving aside an impact the new transit contract had on prices in winter 2019-20? If one matches the fundamentals now and then, it should not be a problem to find the answer.
Demand from Europe’s largest importers has been higher YoY by around 15pc, while aggregate supply has recorded a decline due to considerable decrease in LNG arrivals and sendout. Even taking into account the Ukrainian facilities, the total volume of gas stored in the European UGSs was lower by more than 16 bcm as of 7 January 2021, compared with that of early 2020.
Indeed, 2021 starts as the Year of the Ox should.
Source: Yakov Grabar
See original post by Yakov on LinkedIn.