Northwest Europe holds stocks back

European near-curve prices rallied in November despite early indications that there will be more gas left in storage at the end of the winter than in most recent years.

Cold weather in November, and forecasts for it to extend into December, supported TTF contracts for delivery over the remainder of the winter. And the firmer gas prices are especially evident when comparing gas with coal — its main competition — as the TTF day-ahead market has climbed to levels that would make even the highest efficiency plants uncompetitive.

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A wasted opportunity

Limited flexibility in the auction schedule for buying pipeline capacity has resulted in an opportunity to profit from the NBP’s premium this winter being lost.

The NBP January and February contracts held a premium to the TTF wider than 4.45p/th from early September until the start of this week. This was enough to cover the cost of buying short-term BBL capacity to the UK from the Netherlands and other fees, such as the commodity charges.

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LNG and Algerian gas compete for southern Europe

This is the third in a series of blogs using data from Argus Data and Downloads, which are available to Argus Direct subscribers here.

European LNG supply has risen to the highest in recent years, but when looking at the breakdown of sendout by country it is much too early to call it a “wave”.

The increase so far this summer has come from countries mostly outside the liquid hubs of northwest Europe. Instead of being dumped in northwest Europe, LNG has been competing with Algerian pipeline gas in Italy and Spain.

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