Gas supply crunch drives TTF to record high: VTB
Spot prices at the Dutch TTF gas hub reached $342/'000 m3 on May 14, marking the highest level since September 2018, supported by low supply and the need to replenish gas stocks ahead of the next heating season, Russia's VTB Capital (VTBC) said in a research note.
Europe's gas storage facilities are only a third full, which VTBC noted was close to the five-year seasonal minimum. Cold weather this year prolonged the withdrawal period for longer than usual, while weak renewables output has kept gas demand high in the power sector. VTBC also noted that the carbon price, which has grown 72% year to date, reached $69/metric tons on May 14. This "adds to the support for gas prices through elevated demand for natural gas as a clean fuel," the bank said.
The price spike comes despite depressed LNG supplies to Europe, the bank added. "The rare situation in Europe has elevated TTF spot beyond the Asian futures-based JKM ($322/'000 m3), although prices in the physical market in Asia are a bit higher," it said.