Fit for 55: TTF MA breached today the €55 mark, rising by ~1500% increase since its record lows last year May in an unprecedented price rally in the history of European gas.
5 Key Points to Consider:
(1) This is not a purely European story: JKM prices rose by close to 900% during the same period, supported by a tight global LNG market;
(2) Both supply and demand factors are at play: economic recovery together with weather factors led to a stronger than expected demand growth, while delayed maintenance (from 2020) and unplanned outages weighed on supply and supply flex;
(3) Don’t blame the carbon: carbon and gas prices have a complicated relationship. sometimes carbon is influencing more gas prices, but this time TTF seems to be in the driving seat;
(4) Storage has a key role in price formation: low storage levels are driving nowadays strong injection rates in Europe (supporting spot), while their low fill rates are supporting the winter contracts;
(5) High gas prices will come as a drawback to GHG emissions: we are witnessing a heavy gas-to-coal switchback in the US and Europe, while Asian markets are turning to coal and fuel oil.
What is your view? What is next for gas and gas prices? Can it harm the image of gas in the long-run?
Source: Greg Molnar
See original post by Greg at LinkedIn.