Gas prices have fallen by as much as 10% this week. The lower gas price mainly seems to be a correction to the price peaks of the last two weeks. Paradoxically, a higher European LNG price puts pressure on the price on the TTF. Due to a larger supply, the negative sentiment that drove up prices in recent weeks seems to have left the market for the time being.
The gas price has taken a big step back this week. On Wednesday, June 21, gas traded for €36,74 per megawatt hour. The gas price then fell until Monday, June 26. On that day, the TTF reached a level of €31,98. The gas price then rose slightly to €32,75, a drop of more than 10%.
The falling gas price is a direct response to the strong increase in June. There was a whopping 44% difference between the highest and lowest point of this month. On June 1, the TTF quotation was €23,10, but about two weeks later, on June 15, the gas price had risen to €41,15. The increase in this period was partly caused by disruptions to the Norwegian gas network. The biggest disruption is around the Nyhamna gas processing facility. Because this hub connects two of the largest Norwegian gas fields with the European market, gas supplies from Norway have already fallen by 25%. The disruption has now significantly increased the basic price of gas. Norway is Europe's largest supplier of pipeline gas.
To make matters worse, Asian gas demand rose sharply while the supply of pipeline gas in Europe fell sharply. Due to a heat wave, several Asian countries, including China, need more gas to cool their buildings. As a result, Europe proved to be no longer able to compete in the global LNG market. Many ships that planned to sell their LNG on the European market decided to sail to Asia. Germany in particular suffers from this. Because so far, the entire imports from the three German LNG terminals in June have been lower than the imports at Eemshaven.
Gas prices turn market
The tide now seems to be turning. The higher European gas price makes it attractive again to sell liquefied gas on the European market. European and Asian prices for LNG are currently in balance again, meaning that plenty of liquefied gas is coming to Europe again. Paradoxically, the higher LNG price seems to be putting pressure on European gas prices at the moment. Due to the greater supply, negative sentiment no longer appears to dominate the market.