Diego Armando Maradona once said that to see the ball and run after it makes him the happiest man in the world. You may ask, in what way do his words relate to the European gas market? Actually, VTPA prices follow the same logic, with strong demand in Italy acting as a sort of ball for the Austrian hub.
In last two weeks, the aggregate gas consumption in Italy exceeded 300 mcm/d on colder weather. Pipeline imports recorded a growth through all entry points, while the withdrawals from Italy’s UGSs increased so much that the inventories have been reduced almost back to their 2018 level.
The rapid decline of gas in storage did not go unnoticed, and the VTPA – TTF summer spread as well the price difference between front-year contracts have significantly improved recently. It now seems increasingly likely that the UGSs in Italy can end the withdrawal season with inventories at a much lower level than that of previous years, which is moving the VTPA far-curve.
Will be interesting to see whether VTPA feels the impact of TAP deliveries that should start very shortly this month and the effect of large volumes accumulated in Ukraine, if the withdrawals in Italy remain high in the coming weeks.
Source: Yakov Grabar
See original post by Yakov on LinkedIn.