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Netherlands: TTF natural gas prompt stays firm on cooler weather in spite of oil collapse

04 May 2012 19:13:37 | esgm

Dutch natural gas contracts swung in opposite directions on Friday as the prompt and near curve broadly held firm on expectations of cooler weather while the far curve slumped in unison with bearish oil market movements.

The Day-ahead product, which resisted Thursday's bearish impulse, bucked the trend on the prompt, retreating by €0.15/MWh and settling at €25.00/MWh. However, the rest of the front curve posted modest gains in spite of oil's tumble.

The Weekend contract, which encompasses Saturday-Monday, traded with the greatest frequency and climbed higher as the recent below-average temperatures are poised to continue.

Latest WSI data suggest this situation will persist into next week, allowing spot products to maintain a degree of strength. Temperatures are expected to dip 2°C below normal in the Netherlands.

"The front is reluctant to go down even against the most bearish scenario imaginable," one trader said, referring to the weakness in oil which caused devaluation on all products beyond the front quarter.

However, Friday's announcement that the maintenance period at Shell's Ormen Lange gas field will be shortened to just four days kept a lid on any decent weather-induced gains.

Instead, contracts edged slightly higher, with the front month firming to the greatest extent. Some sources said that uncertainty surrounding LNG arrivals in the next month has lent support to the near curve.

One trader reported a large North Sea producer to be buying sizable volumes of spot gas at the TTF and shipping it to the UK. The producer is capitalising on an attractive arbitrage opportunity. NBP Day-ahead was last assessed at an equivalent €0.90/MWh premium to its TTF counterpart.

Meanwhile, after briefly flipping into import mode, Dutch exports to Germany have resumed. Rare imports into the Netherlands, through Emden and Dornum, were recorded earlier in the week, when the TTF Day-ahead was trading at a premium to the NCG. However, the export trend has now resumed with the NCG Day-ahead regaining a €0.15/MWh premium over the TTF equivalent. Latest data from Dutch grid operator GTS show flows to Germany of about 17Mm³/day. JE

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