NATURAL GAS: the crazy TTF market goes into negative price for a moment …
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As Reuters stated, the accumulation of tankers highlighted Europe's problem with LNG import capacity which prompted Germany to urgently conclude an agreement to build two floating plants so that it could receive the LNG directly. : The region has had to find alternative supplies, including LNG, but the arrival of more cargoes of liquefied fuel has highlighted Europe's lack of “regasification” capacity, as the regasification plants are operating at their maximum limit. That's where all the ships loaded with LNG are stopped
If the backlog isn't cleared soon, those ships could start looking for alternative ports outside of Europe to unload their cargo. Meanwhile, there is more LNG floating off the coast of Europe, Reuters reported, citing multiple sources, suggesting that the crowd of 35 tankers off Spain is only part of the actual buildup.
"Fluctuating storage levels in LNG transportation are always high levels with just over 2.5 million tons engaged in floating storage," Oystein Kalleklev, chief executive of Flex LNG Management, told Reuters.
Add to the epic buildup of LNG tankers the fact that most storage facilities in Europe are nearly full before winter (as of Sunday, EU storage facilities were 93.4% full, with the continent's two largest markets, Germany and Italy, experiencing rising levels) and coupled with weather forecasts suggesting temperatures in continental Europe will be between 4 and 8 degrees Celsius warmer than the seasonal average this week, which implies lower demand and the result has been a sharp decline in European natural gas futures.
At one point in the morning, first-month Dutch TTF futures, which serve as a benchmark for Northwest Europe, fell more than 10% to € 101.39 per megawatt hour, after opening at a new low. of four months of 100 EUR / MWh.
But what is more remarkable is that the lack of storage availability – similar to what happened in April 2020 when the WTI traded briefly as low as $ -40 – forced very short-term spot prices to plummet as those assigned to the delivery (with no place to store the gas) were literally paying the others to get the gas out of their hands!
The risk of an unlikely April 2020 WTI moment in EU #gas spot month gas continues to linger amid strong imports, warm weather and demand destruction. So far, however, only the "next hour" price has gone negative. https://t.co/aSgXY1ks7d
– Ole S Hansen (@Ole_S_Hansen) October 24, 2022
And certainly, early Monday, the “next hour” TTF contract dropped briefly to € -15.78, the lowest ever since there was simply nowhere to park natural gas.
However, just like the negative press of the WTI in April 2020 was a historical outlier, a mess due to an illiquid and inelastic market, which is not working. There is no negative gas when even liquefied oil is now very expensive.
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The article NATURAL GAS: the crazy TTF market goes into negative price for a moment… it comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gas-naturale-il-pazzo-mercato-ttf-va-in-prezzo-negativo-per-un-momento/ on Tue, 25 Oct 2022 19:04:08 +0000.