European Gas Rally Continues Amid Russia and LNG Supply Risks

European TTF front month gas is trading up to the highest since 10 July driven by import supply risks and hot weather in southern Europe boosting cooling demand in the region. Supply risks come from the Russian supply volume flowing into southern Europe after increasing tensions in Ukraine and from potential competition for LNG supplies from Asia. No changes have been seen to current Russian pipeline flows.

• Upside is still limited by low industrial demand and high natural gas storage levels after recent above normal injections.
• The share of US cargoes headed to Asia is picking up with US arrivals into Northwest Europe on track to be the lowest since last summer.
• Australian LNG export maintenance could be causing some Asia supply tightening although demand from key buyers remains muted. North Asia spot LNG prices have edged higher towards 12$/mmbtu with some importers inquiring about winter deliveries according to Bloomberg.
• Global floating LNG volumes climb to 2-month high last week up to 27% above 2022 levels.
  • TTF AUG 23 up 3.7% at 31.7€/MWh
  • TTF WIN 23 up 1.3% at 50.5€/MWh
  • TTF SUM 24 up 2% at 52.9€/MWh
  • JKM Aug 23 up 3.4% at 11.26$/mmbtu
  • JKM-TTF Aug 23 down -0.2$/mmbtu at 0.96$/mmbtu