European gas prices rise in anticipation of forecast cold snap; Gazprom requests 29.5 mcm for transit via Ukraine
MOSCOW. Feb 2 (Interfax) - The spot price for gas in Europe is rising, as the revised forecast for next week calls for colder temperatures.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom today to transport 29.3 million cubic meters of gas through the country, the same as 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 29.5 mcm on February 2, 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
The changing weather in Europe has brought increased wind to the region, thus an increase in electricity generation from turbines.
Power generation from wind turbines in Europe has averaged 24% this week, 14% last week, and 18% two weeks ago, according to data from WindEurope.
The day-ahead contract for today at the Dutch TTF gas hub in the Netherlands closed at $682 per thousand cubic meters.
The "Asian premium", or the spread between gas prices in Asia and LNG prices in Europe, is steady. In Asia, the most expensive futures contract for March on the JKM Platts index is $677 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $595 per thousand cubic meters.
EUROPEAN INVENTORIES
Current inventory levels in Europe's underground gas storage facilities have declined to 72.09%, which is 19.8 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories contracted 0.52 percentage point during the gas day for January 31.
One of Europe's largest underground gas storage (UGS) facilities, Reden, has stopped operations until the end of the week owing to an unexpected situation.
However, the relatively mild weather in October, November and January, in addition to the continent's austerity measures, have resulted in the level of reserves in UGS facilities being at an all-time high for this time of year since monitoring began, thereby underpinning the authorities' confidence in getting through the winter in good shape.
European LNG terminals have been operating at 62% capacity since the beginning of January against an average of 67% in December. January LNG imports are down 5% from December.
LNG inventories in the tanks of receiving terminals are declining even more at 16% compared to the beginning of the month, implying that the inflow of new LNG shipments is declining into the region.
Germany has opened a second terminal for receiving LNG on the Baltic coast. A terminal at Lubmin has joined the facility in Wilhelmshaven, and the launch of a floating storage regasification unit in Brunsbuttel is being prepared. However, the recently opened Eemshaven terminal in the Netherlands has closed owing to damage to the heating 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.
Reserves decreased 2.6 billion cubic meters for the latest reporting week ending January 20, 2023. Consumption of inventories has been recovering owing to the normalizing weather, though it is still below the typical level for this time of year.
The current level of inventories is around 57%, which is five percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.
S&P Global forecasts an ongoing increase in offtake to 3.9 bcm for the week through January 26, though this is also much less than the normal figure for this time of year.
Cold weather is forecast in the U.S. for February, which should result in increased energy costs for heating and increased gas consumption. On the other hand, Freeport LNG, the country's largest LNG plant, is still postponing restart following an accident, and gas remains on the domestic market that has been expected to be exported.
The EIA currently expects UGS stocks to drop by 60 bcm 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.