The narrative that’s taking a strong hold on the European and UK gas markets this week has been the storage situation. As mentioned, a few weeks ago this will continue to be the driving force for prices over the coming months. The market is concerned with the rate of depletion due to colder weather and demand levels needed to replenish over the summer period. Reuters earlier this week reported Europe may have to buy at least 100 additional gas cargoes this summer, worth around $6 billion at today’s prices, to refill gas stocks. Europe’s gas storage sites are 58.5% full, already below the level left in stock after the end of the previous, mild, winter, data from Gas Infrastructure Europe showed. The European Union is planning to extend its targets to fill gas storage ahead of winter for at least another year after their scheduled expiry in December 2025. However, some governments are concerned that setting fixed deadlines to fill storage could cause price rises by signalling to the market that Europe needs to buy more gas by a specific date. Earlier this week TTF prices moved above €50/MWh for the first time this year when reports emerged that the German gas operator Trading Hub Europe (THE) is considering a subsidy mechanism to ensure German gas storage facilities are full by 1 November. Italy’s energy minister also said on Thursday the country plans to make an early start on filling strategic gas stockpiles, as it expects gas wholesale prices to spike in the summer.
Flagship Energy’s Tejal Shah Energy Markets Update – 23rd January 2025
Tejal Shah, Head of Trading & Risk at Flagship Energy provides a market update