Market Insight
Tony Jordan
31 December 2022

Market Insights 31/12/2022

A continuation of the bearish momentum got the week off to a start yesterday with losses showing across the board.

This came as the EU finally agreed a price cap after many weeks of discussions. This will come into play from 15th February and is set to a much lower level than previously discussed at €180/MWh for the TTF front month contract. If it stays above this level for at least three days and the price is also €35/MWh higher than an LNG reference price for the same period. The practical application of the cap will of course be the only test of whether this works.

ICE, which hosts the TTF market, has said it would consider its position if a cap was introduced, citing it has concerns over the ability to run a fair and orderly market.

The latest long term weather runs show little movement to late last week, with some warmer temperatures to be expected in the days ahead before returning to at or just below seasonal normal until the end of January.

Yesterday saw the TTF January contract settle at €108.54 (from €115.45) and the NBP January contract at 270.07p (from 288.42p).

Aasta Hansteen on unplanned outage this morning and we see a flow level at 328mcm from Norway (332). Russian nominations showing Velke Kapusany at 37.5mcm (42.0) and Sudzha at 42.4mcm (42.4). Flows on Nord Stream are now a likely physical impossibility. Gas storage showing at 83.82% full as per AGSI+. LNG vessels due to arrive in UK next couple of weeks is 14.

This morning we see the January TTF contract at €104, DOWN €5 to the previous settlement. 

A quick check on some key contracts:
Curve TTF January €104, Summer €110 (vs €109 and €116)
Curve NBP January 270p, Summer 268p (vs 288p and 283p)
UK Gas NBP spot 201p (from 275p).
UK Power DA £188 (from £160).

UK power prices show the UK January Baseload contract at £298 (£310) and Summer at £250 (£260).

In other areas of the market Brent Oil is at $80 ($79) and EUAs are at €84 (€84). Henry Hub is at $5.85 ($6.60) and JKM is at $36.49 ($35.58).