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Netherlands: Late crude oil lift offers some support to bearish TTF trend

03 May 2012 20:21:02 | esgm

The TTF market continued on its downward trajectory on Thursday as a weakened crude prices exerted downward pressure on the prompt for most of the session.

Despite an initial rally, in which the Day-ahead gained on the back of some technical buying early on in the session, a weakened macroeconomic picture coupled with declining crude oil prices guaranteed another bearish day on the hub.

By early afternoon, the contract had lost around €0.30/MWh, bringing prompt contracts down with it.

The market is still nervous, traders said, and uncertainty about the direction on the prompt and near curve is generating some volatility.

If the weather gets warmer in the next few days, this will reduce natural gas demand and bring in more bearishness, one source said.

Another cited concerns over LNG supply and forthcoming maintenance as drivers that could inject some bullishness to the market. The view that Europe has been withdrawing from storage recently, and the need to step up injections was also raised by traders.

As was evident on Wednesday when the spot traded within a €0.70/MWh range, the spot exhibited a similar level of volatility, changing hands within a €0.65/MWh margin.

The pattern was less pronounced on the front month and seemingly less volatile session on session with the June '12 contract trading within a €0.35/MWh range compared with €0.65/MWh on Wednesday.

Despite shouldering end-of-day losses of €0.20/MWh, traders said the June '12 contract gained some support from the "NBP shooting up" on the back of colder weather forecasts in the UK, which had filtered up to the prompt, sources said. KA

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