EU gas nears $600/1,000 cubic meter on back of weather forecast; Gazprom requests 32.6 mcm for transit via Ukraine
MOSCOW. Jan 17 (Interfax) - Europe's spot gas price has neared $600 per thousand cubic meters despite temperatures on the continent having approached seasonal norms.
The current forecast is better than the preliminary one, specifically regarding nighttime temperatures that should be warmer than the previously forecast frost.
The relatively mild weather in October and November and thus far in January, in addition to the continent's austerity measures, have resulted in the level of reserves in underground gas storage (UGS) facilities reaching an all-time high since monitoring began, thereby underpinning the authorities' confidence in getting through the winter in good shape.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 32.8 million cubic meters of gas through the country against 35.4 mcm the previous day, data from the GTSOU show.
Capacity was requested only through one of two entry points into Ukraine's Gas Transport System, the Sudzha metering station. A request was not accepted through the Sokhranovka metering station.
"Gazprom is supplying Russian gas for transit through the territory of Ukraine at the volume confirmed by the Ukraine side via the Sudzha metering station at 32.6 mcm on January 17, with booking via the Sokhranovka metering station declined," Gazprom spokesman Sergei Kupriyanov told reporters.
The GTSOU has declared a force majeure with respect to acceptance of gas for transit through Sokhranovka, claiming that it cannot control the Novopskov compressor station. The route through Sokhranovka had provided transit of more than 30 mcm of gas per day.
Gazprom believes that there are no grounds for the force majeure or obstacles to continuing operations as before.
EUROPEAN MARKET
Prices on the European market have slipped despite the return to seasonable temperatures. The day-ahead contract for today at the Dutch TTF gas hub in the Netherlands has closed at $608 per thousand cubic meters, and the February futures contract was $615 per thousand cubic meters.
In Asia, the most expensive winter futures contract for February on the JKM Platts index remains substantially higher at $957 per thousand cubic meters on the heels of European prices.
Power generation from wind turbines in Europe has averaged 25% this week following an average of 29% last week, according to data from WindEurope.
EUROPEAN INVENTORIES
Current inventory levels in Europe's underground gas storage (UGS) facilities have declined to 81.49%, which is 19 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe (GIE).
Reserves contracted 0.2 percentage point during the gas day for January 15. Industrial and commercial consumption of gas declines during weekends, thus offtake from UGS facilities also decreases.
However, Gazprom has also warned that, "The load on UGS facilities in Europe will be higher than in previous years owing to the changed logistics and sources of gas supplies to the European market."
European LNG terminals have been operating at 63% capacity since the beginning of January against an average of 67% in December.
Germany opened its second LNG receiving terminal on the Baltic coast at Lubmin over the weekend in addition to the terminal at Wilhelmshaven, though the Netherlands' recently opened Eemshaven terminal has closed at least until the end of January owing to damage to the heat supply system.
U.S. INVENTORIES
The state of gas in UGS facilities in the United States is of increasing importance for the global market, and the country is actively increasing gas exports, primarily to Europe.
The latest reporting week ending January, 6, 2023, witnessed an increase at a symbolic 300 million cubic meters rather than a decrease against an S&P Global outlook of a reduction of 200 million cubic meters. The reason for these unusual figures has been owing to the warm weather and an unexpectedly quick recovery in production after the failure from the cold weather at the end of December.
The current level of inventories is around 60%, which is nearly in line with the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.
The EIA currently expects UGS stocks to drop by 60 billion cubic meters this winter to the average for the last five years. Natural gas volumes in storage facilities should total 40 bcm by the end of March, which would be 8% below the average for five years.