European gas prices slump with start of new gas year, Gazprom requests 42.3 mcm for transit via Ukraine
MOSCOW. Oct 3 (Interfax) - The spot price of gas in Europe on Monday alone fell by 14%, and it was down 28% over the weekend. For the second year at this time, prices followed a similar trajectory: October, as the first month of the new gas year, is accompanied by significantly lower prices than those in September.
The main explanation for this is that weather continues to be warm ahead of the air temperature droping further and the heating season starts while underground storage facilities are filled to capacity.
UKRAINIAN TRANSIT
The Gas Transport System Operator of Ukraine, or GTSOU, has accepted a booking from Gazprom for Tuesday to transport 42.4 million cubic meters of gas through the country, and the figure was 41.2 mcm yesterday, data from the GTSOU show.
The published nomination is technically the maximum possible flow in this direction, given all of the restrictions imposed by the Ukrainian side.
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 42.3 mcm on October 3, 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
Wind turbines provided an average of 11% of the region's electricity needs on October 2, dipping below the usual percentage for this time of year, with the figure having been 18% in October 2022 and 14% in September 2023, according to WindEurope.
The day-ahead contract at the Dutch TTF gas hub in the Netherlands closed at $351 per thousand cubic meters, with the spot price having dropped 14% yesterday.
There is a noticeable split between LNG prices in Asia and those in Europe. In Asia, the most expensive futures contract for November on the JKM Platts index is $514 per thousand cubic meters, and futures under the LNG North-West Europe Marker are $446 per thousand cubic meters.
EUROPEAN INVENTORIES
The level of natural gas reserves in Europe has become a key indicator for the global market, with the region overall continuing to pump gas into underground gas storage (UGS) facilities.
Current inventory levels in Europe's UGS facilities are 96.99%, which is 8 percentage points above the average for the same date over the past five years, according to Gas Infrastructure Europe.
Inventories increased 0.21 percentage point during the gas day for October 1, with the pace still markedly lagging the usual injection levels over the past five years. Nevertheless, reserves have already reached well above the target level of 90% storage.
European LNG terminals operated at an average capacity of 50% in August, and they have averaged 48% since the beginning of September, with LNG imports in September expected to revisit minimum levels from 2021.
European LNG terminals operated at an average capacity of 48% in September; while on the first day of October this figure was at 46%.
U.S. INVENTORIES
The state of reserves in UGS facilities in the United States is of increasing importance for the global market, as the country is actively increasing gas exports.
The U.S. continues the season for injecting gas into UGS facilities. Inventories rose 2.5 billion cubic meters for the latest reporting week, which is standard volume for this time of the year.
The current level of inventories is 70%, which is 6 percentage points higher than the average figure for the past five years, according to the U.S. Energy Department's Energy Information Administration.