The Coal Trader

Coal News for Mining & Investing Professionals

Gas prices rebound from 3.5-month low but sentiment weak

European gas prices rebounded further from Thursday’s 3.5-month lows in early Wednesday trading, underpinned by tentatively supportive weather signals but sentiment remained bearish due to strong supply and subdued demand.

The benchmark front-month Dutch TTF contract traded last up EUR 1.18 at EUR 33.75/MWh on Ice Endex. Yesterday, the contract touched its lowest since 7 September of EUR 32.10/MWh. The equivalent UK NBP contract was 3.09p higher at 83.64/th.

“It’s less windy and there are some drier forecasts for central western Europe,” said a commodities analyst with a UK investment firm.

But while a “slow trend to colder” could be seen next week across western Europe, in general temperatures would remain 2-5C above seasonal norms, according to forecaster SMHI. And German wind output should rise a further 9 GW on Thursday to average 46 GW, according to Montel Energy Quantified (EQ) data.

Bearish market

As such, sentiment remained more broadly bearish amid ample stocks and relatively muted seasonal demand, said market participants.

“I’ve been bearish and I remain bearish,” said a portfolio manager with a German energy firm, adding “I think the crisis is over”.

“Only a big blow to flows could change the market situation,” he said, adding any risk to demand would create more downside. And while weather remained an important driver, there was a low probability of a sustained bullish effect linked to this, he added.

Norwegian flows to the rest of Europe dropped by around 4mcm from Tuesday’s levels but remained high at 356mcm/day, TSO Gassco data showed. And European gas storage facilities were seen last at around 88% of capacity, up from 83% a year ago, Gas Infrastructure Europe data showed.

On the LNG front, provisional Kpler estimates showed December arrivals to European destinations reaching a seven-month high of 11.2m tonnes (15.2bcm). As such, European LNG prices this week hit a near five-month low amid the strong supply balance.