Coronavius likely to lower gas and power trader appetitive for risk

Author: Thomas Rodgers

2020/03/13

LONDON (ICIS)--Widespread remote working due to the coronavirus is set to hit European natural gas and power liquidity, according to traders.

A number of firms have already asked traders to work from home or are expected to do so.

While some trading activities around gas and power dispatching need to be done from a trading floor, most other tasks can be done from home.

However, traders indicated it is unlikely to be business as normal with participants increasingly risk averse away from an office environment.

One trader said: “I think it already has [had an impact].

“People closing out positions and less willing to take risks. I’m not particularly keen on doing anything big.”

Another added: “Gas liquidity has not fallen off a cliff, but it has taken and hit and we will see it drop off further.”

He added that traders will still need to manage their books, but the appetite for risk will drop.

Dutch TTF traded volumes hit the highest total of the month on Monday 9 March as participants reacted to Brent crude’s largest fall in nearly 30-years.

Trade dropped on the Tuesday but has since picked back up.

Traders said this was likely a result of funds exiting short positions as they pull back exposure to the gas market.

Italian PSV volumes have fallen after the introduction of nationwide quarantine measures on Tuesday 10 March.

While there may be a reduced pool of liquidity, the market will be prone to spikes in activity as traders price in any impacts to demand centres or supply infrastructure.