Market Insight
Tony Jordan
21 December 2022

Market Insights 21/12/2022

A bullish start to yesterdays session turned into a bearish end as the market swung in direction throughout the session.

No significant change to the long range temperature forecast, which continues to show very cold temperatures for the next ten days or so and staying below seasonal normal until the end of January.

Germany announced that its plans to show gas demand reduction, which had been going well until last week, when it reported an increase to demand. This starts to show the cracks in the wider view that Europe can show an impressive demand reduction which does appear to have been given a big help with above normal temperatures for the last two months. Now that the colder weather has arrived this will now test those targets.

Yesterday Reuters reported that energy supplier Shell Energy, who have around 1.5 million domestic customers after it took on several of the failed suppliers late last year, reported that it had been given a £1.2 billion cash injection this year by its parent, Shell, as it reported increased operating losses of £100 million in its latest annual filing. This will be a stark warning to the continued struggles of suppliers this past year after nearly 30 left the market last year. Shell Energy are fortunate to have a wealthy parent, but many do not, and the sector remains extremely vulnerable.

Yesterday saw the TTF January contract settle at €138.89 (from €149.25) and the NBP January contract at 349.59p (from 374.49p).

Oseberg and Karsto remain on unplanned outage this morning and we see a flow level at 326mcm from Norway (317). Russian nominations showing Velke Kapusany at 45.5mcm (40.2) and Sudzha at 42.4mcm (42.4). Flows on Nord Stream are now a likely physical impossibility. Gas storage showing at 89.93% full as per AGSI+. LNG vessels due to arrive in UK next couple of weeks is 13.

This morning we see the January TTF contract at €141, UP €2 to the previous settlement. 

A quick check on some key contracts:
Curve TTF January €141, Summer €140 (vs €139 and €149)
Curve NBP January 350p, Summer 343p (vs 374p and 365p)
UK Gas NBP spot 355p (from 370p).
UK Power DA £378 (from £364).

UK power prices show the UK January Baseload contract at £487 (£500) and Summer at £310 (£325).

In other areas of the market Brent Oil is at $76 ($77) and EUAs are at €89 (€88). Henry Hub is at $5.96 ($5.72) and JKM is at $34.30 ($33.35).