European Gas Prices Climb to 15-Month High
European gas prices jumped to the highest level since October 2023 as a result of unexpected supply disruptions and colder weather forecasts. The two catalysts in the energy equation amidst tariff contests in the global economy worsened the supply threats in an already tight market.
The supply-side risk increased amidst the European Union plan to sanction Russia’s supply. TTF front-month futures rose over 6% to close above EUR51/MWh as of yesterday as market participants remained concerned about volatile supplies of liquefied natural gas.
The fear followed the recent production issues at some export facilities affecting fuel flows, according to ING notes for Thursday. Meanwhile, the heating demand is expected to increase as temperatures are forecasted to drop over the coming days.
Additionally, a rise in carbon prices is also supporting the upward rally in gas. Looking at inventories, the European gas storage is now only about 55% full, down from 72% at the same stage last year and below the five-year average of 62%, ING said in a note.
But the oil market traded little changed in the morning session after falling sharply yesterday as oil inventory rose while uncertainty continued over US trade policy. Meanwhile, trading volumes were relatively subdued as the Chinese market, which has been closed for the Lunar New Year Holidays,.
US weekly inventory numbers from the US Energy Information Administration (EIA) yesterday remained fairly bearish for the oil market.
US commercial crude oil inventories (excluding SPR) increased by 3.5 million barrels over the last week, well above the 2.86 million barrel increase the API reported the previous day.
This was the first weekly build reported since November. When factoring in the SPR, the build was even larger, with total US crude oil inventories rising by 3.7m barrels. Total US commercial crude oil stocks stand at 415 million barrels, the highest level since late December.
In refined products, stocks of gasoline increased by 2.9 million barrels, against a forecast for a build of just 0.35 million barrels. However, distillate fuel oil stockpiles fell by around 5 million barrels last week, compared to the market expecting a drawdown of 2.2 million barrels.
Meanwhile, refineries operated at 83.5% of their capacity following the declines in East Coast and Midwest refining rates along with lower refining rates on the Gulf Coast. This was down from the refining rates of 85.9% seen in the previous week. #European Gas Prices Climb to 15-Month High IAS 29: Nigeria Not Hyperinflation Economy – Financial Reporting Council
