After a phase of structural declines, the gas market went through a turbulent period. Various disruptions on the Norwegian gas network and work on the French Montair LNG terminal are currently causing a lower supply on the European market. In addition, the market fears lesser times due to a drop in European LNG imports.
On Wednesday, May 31, the TTF quoted €28,85 per megawatt hour. After that, the gas price fell sharply to €23,10. On Monday, June 5, the gas price was at its highest level of the week. A megawatt hour of gas traded for €28,48 on that day. On Tuesday, June 6, the gas price was a lot lower again, and the gas price was €25,36.
There was a difference of almost 25% between the high and low points of the week. This seems like a huge difference, but compared to last year's quotations, the difference is not too bad. Last week there was more than €5 difference between the extremes. In 2022, the gas price would have risen by €25 to €75 with such a relative price difference. In a way, the increase shows how sharply the gas price has fallen since 2022. Yet the increase also indicates that the apparent calm that seems to characterize the gas market at the moment is still far from self-evident.
Disruptions to the Norwegian gas network in particular cause unrest. As a result, deliveries from several large Norwegian gas fields will be halted until at least mid-June. Norway is responsible for about a quarter of all European gas supplies. In addition, the upload capacity of European gas is currently not running at its maximum capacity now that imports from the French Montoir LNG terminal are at a standstill due to work. The terminal has been under maintenance since May 28 and according to operator Engie, the gas hub will remain out of use until at least June 18.
LNG imports down slightly
Another reason for the unrest is that the European Union is importing less liquid gas for the first time since the Ukraine war. In May, 7,66 million tons of LNG were exported to Europe. This meant that imports were approximately 0,4 million tonnes lower than in April. The fact that Europe has to make do with less liquid gas is mainly due to greater demand from Asia and South America.
After the low levels earlier this spring, liquefied gas prices have risen in these continents. Now that the European gas price is much lower, it is unattractive for traders to sell LNG in the European Union. Although the decline is still small, the decline fuels fears of structurally lower export volumes. The International Energy Agency (IEA) has repeatedly warned of lower European import volumes due to greater Asian demand. The gas market therefore expects imports to decline further in June.