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Nord Stream Pipeline Damage Drives TTF Price Increase

COMMODITIES

OIL

  • High volatility in Brent and WTI markets on demand concerns, potential for OPEC production cuts and hurricane disruption to Gulf of Mexico production.
  • The overriding factor driving crude recently has been concern for weaker demand growth and recession fears however a pause in the USD rally has allowed crude to recover ground today.
  • Forward curve backwardation is supported by limited spare capacity and supply disruption risks combined with the possibility of a reaction from OPEC to lower demand and falling prices.
    • Brent NOV 22 up 1.5% at 85.35$/bbl
    • WTI NOV 22 up 1.4% at 77.75$/bbl
    • Gasoil OCT 22 up 1.4% at 947$/mt

GAS

  • TTF extends gains as damage causing leaks and pressure drops in the Nord Stream pipelines mean the return of those gas supplies from Russia to Europe look even less likely.
  • Europe is heavily reliant on LNG as they attempt to secure alternatives to Russian gas supplies by increasing regas capacity and agreeing new LNG supply contracts.
  • The new Baltic pipeline could be commissioned at full capacity from the end of November instead of Jan 1.
    • TTF OCT 22 up 8.4% at 188.51€/MWh
    • US Natgas OCT 22 up 2.5% at 7.08$/mmbtu

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