There is currently a relaxed atmosphere on the gas market. Colder weather did not lead to a major price increase on the TTF in mid-January. Now that temperatures seem to be above the five-year average again in the short term, the price of gas has reached its lowest level in sixteen months. In addition, a possible reopening of the second largest LNG exporter in the United States will put extra pressure on gas prices.
The gas price remained relatively stable this week. On Wednesday, January 18, the TTF rate was €61,71. The gas price rose until Friday, January 20. on that day the gas price closed at €66,90. Then the course turned on the TTF. On January 25, the gas price (at the time of writing) was at the lowest point of the week, at €55,02. The gas price on the TTF thus reached its lowest level since September 7, 2021.
Now that the cold period is coming to an end, the gas price seems to be dropping again. According to the weather forecast, above-average temperatures will return from next week. Despite two colder weeks, the gas price remained quite stable in January. Even the maintenance of various gas installations of Europe's largest exporter Norway barely managed to increase the gas price in January. According to analysts, the high filling rates of European gas reserves are currently keeping gas prices in check. With the month of February approaching, European gas reserves are still 78% full according to the most recent figures. The high filling rate is increasing confidence that Europe will be able to fully fill its gas reserves before next winter, reducing tension on the gas market.
In addition to the high filling levels, lower gas consumption in the production of electricity ensures stability. In January, European wind turbines were operating at high speed and coal-fired power stations were switched on in many countries due to the falling price of coal. In addition, maintenance of most French nuclear power plants was completed in January. Due to overdue maintenance, almost half of France's nuclear reactors were shut down for a large part of 2022. Because France generates about 70% of its electricity through nuclear power plants, the country was forced to import a lot of electricity. Now that the nuclear power stations are back in operation, a lot less gas is needed to generate electricity for the country.
Freeport LNG completes repairs
In addition to the warmer weather and greater electricity production from other sources, news from the United States is also putting extra pressure on gas prices. The second largest LNG exporter from the United States, Freeport LNG, has requested permission to restart their processing facility. If all goes well, Freeport can restart its LNG production in eleven days.
A restart would significantly increase global LNG availability, as Freeport produces about 20% of all US LNG. Jera, the major LNG importer from Japan, expects Freeport to be fully operational again in March. The LNG price is currently already on the low side, but the additional supply could cause the price to drop further.