Market Insight
Tony Jordan
5 January 2023

Market Insights 05/01/2023

Markets regained the losses from Friday in yesterdays session to start the week off in bullish fashion.

The latest long-term weather shows a dip in temperatures to be expected later this week before returning to seasonal normal until late February. Again no ‘cold snap’ seems to be expected which will likely give the markets confidence that the 80% gas stocks are unlikely to be fully called on this winter.

However as China looks to ‘reopen’ after its Covid restrictions, this could increase demand for LNG in the coming weeks and months. For the first time ever, Europe has become almost wholly dependent on LNG being readily available to replace Russian pipeline gas. As the market is of course global, this could make European markets volatile as prices could be pushed to attract cargoes.

Last night the UK announced its ongoing energy support package for businesses with the introduction of EBDS, replacing EBRS, from 1st April. In essence it is a very similar scheme but with a higher threshold to be reached before support kicks in. Please see our separate report on this released here last night.

Yesterday saw the TTF February contract settle at €74.30 (from €71.75) and the NBP February contract at 183.64p (from 170.00p).

No unplanned outage this morning and we see a flow level at 342mcm from Norway (345). Russian nominations showing Velke Kapusany at 29.8mcm (29.8) and Sudzha at 35.4mcm (35.4). Flows on Nord Stream are now a likely physical impossibility. Gas storage showing at 83.05% full as per AGSI+. LNG vessels due to arrive in UK next couple of weeks is 18.

This morning we see the February TTF contract at €72, DOWN €2 to the previous settlement. 

A quick check on some key contracts:
Curve TTF February €74, Summer €77 (vs €73 and €73)
Curve NBP February 184p, Summer 192p (vs 170p and 184p)
UK Gas NBP spot 182p (from 180p).
UK Power DA £122 (from £121).

UK power prices show the UK February Baseload contract at £185 (£179) and Summer at £180 (£178).

In other areas of the market Brent Oil is at $80 ($79) and EUAs are at €81 (€77). Henry Hub is at $3.91 ($3.71) and JKM is at $27.12 ($28.45).