TTF Within-day price hits €120.00/MWh
Dutch exports to Germany slashed
Northern French grid extremely short of gas
Italy struggles to attract imports, grid remains short
Spain becomes a net exporter as prompt prices fall
Freezing weather continued to threaten continental European natural gas systems on Thursday, triggering emergency warnings and soaring prices.
At Europe’s largest gas market, the Dutch TTF Within-day contract opened near €60/MWh and climbed to an intra-day high of €120.00/MWh later in the day.
The Netherlands increased German high-calorific gas imports by 50% to meet its rising domestic demand and counter lost production.
High-to-low calorific gas conversion was at maximum capacity, and grid operator GTS was also drawing on nitrogen reserves to meet demand.
The grid remained relatively balanced throughout the day.
More expensive TTF prices meant the traditional incentive to buy cheaper Dutch gas for German supply disappeared on Thursday. As a result, Dutch supply to Germany dropped by around a third.
German storage withdrawals were up by around 68 million cubic metres (mcm)/day this week so far compared with last week.
Temperatures in Germany were getting milder compared with previous days, which meant prompt price spikes were more influenced by neighbouring markets rather than fundamentals.
French Day-ahead gas products broke new records on Thursday, as grid operator GRTgaz struggled to balance the system in the northern grid. The operator issued a red warning to shippers for a second day in row to correct large imbalances.
A perfect storm of plummeting LNG shipper nominations at the northern Montoir terminal and curbed Norwegian flows into Dunkirk caused PEG Nord and TRS within-day and day-ahead products to soar.
GRTgaz requested shippers increase send-out from LNG terminals to balance the grid and forecast linepack in the north to be short on Friday.
The PEG Nord Within-day contract changed hands at a high of €104.00/MWh at 14:22 London time. Meanwhile, the PEG Nord Day-ahead was bought at €94.05/MWh - the highest ever recorded for this contract.
Italian natural gas demand was expected to shoot up to 396mcm on Thursday, just under a five-year high.
The weather-driven demand exposed the system to severe undersupply as imports and available withdrawal capacity from storage sites were unable to meet consumption needs.
The system was still 14mcm short in the afternoon, despite maximised LNG send-out from terminals. Northern European supply was capped by rocketing prices in neighbouring hubs, which made it hard to cover short-term import costs for shipping gas through Switzerland.
The PSV Day-ahead was trading at €91.00/MWh just after 14:00, €11/MWh above the highest trade recorded by ICIS on the PSV, but at a discount to the TTF.
In an unusual turn of events, Spain became a physical exporter of gas through the 20mcm/day Pirineos virtual interconnector point that connects Spain’s PVB market with southern France’s TRS zone on Thursday.
This came after Spanish prices, though volatile, fell in contrast to those in northern Europe.
During the morning the Spanish PVB was at one point trading €16/MWh below its counterpart at the benchmark Dutch TTF, but this spread was implied to be far wider as the TTF Day-ahead continued to climb.
Grid operator data showed that gas was flowing from Spain to France physically, albeit only at around 1mcm.
Bullishness at the NBP pushed the British Day-ahead product higher relative to the Belgian Zeebrugge contract.
As a result, the Day-ahead basis traded at -4p/th during the morning - significantly wider than the previous session. If the basis remains around this level it will indicate a very strong financial incentive for shippers to send gas to Britain through the bi-directional Interconnector pipe on Friday.