Near Term TTF Surges and Curve Supported by Supply Risks

TTF front month extends gains to reverse most of the decline seen last week on supply concerns ahead of the winter heating season with temperatures in NW Europe due to cool back to near normal next week. A suspected leak in the undersea Baltic pipeline between Finland and Estonia is combining with risks from potential strikes in Australia adding competition to LNG supplies while global energy prices rise due to Middle East tensions.

• The short term impact on supplies is mostly driving strength in the near term TTF prices although is also supporting some gains across the curve with market sensitivity to any tightening of supplies over the coming winter. "If it appears that the unusual pressure drop observed in the morning of Oct. 8 ... is due to a leak (that) caused damage to the pipe, repair work may take at least several months depending on nature of the damage," Gasgrid said.
• The front month rally has driven the Q1 2024 -Nov 2023 spread down from over 7€/MWh on Friday back to around 5.5€/MWh today.
• The winter 24 contract is maintaining a premium over the current winter with the Q1 2025 -Q1 2024 spread trading between about 3.5 and 4€/MWh so far this month.
• The TTF 30 day historical volatility last week fell below 90% for the first time since early June.
  • TTF NOV 23 up 8.6% at 41.52€/MWh
  • TTF Q1 24 up 3.4% at 46.68€/MWh
  • TTF SUM 24 up 3.4% at 45.6€/MWh
  • TTF WIN 24 up 2.7% at 49.65€/MWh