Monthly Market View – December, 2022
Weekly Market View – w/c 9th January, 2023
Market Drivers – December
Our specialists compile a Market Drivers report each month.
We have highlighted Bearish drivers, expected to contribute to the market lowering, and Bullish drivers, expected to contribute to the market going higher.
– European storage forecast to end last year 61 TWh above the five year average
– January weather forecasts suggest higher than seasonal norm temperatures
– Soft UK domestic demand amid warmer weather
– Commissioning of two German FSRU’s adding to EU LNG regasification capacity in north West Europe
– North West Europe forecasts to end January above five year averages for gas storage
– Risk of remaining Russian supply via Ukraine to be cut/reduced
– Lower Norwegian exports amid maintenances and outages
– Delay to Freeport terminal restart
– Changes to weather forecasts in the UK and North West Europe
– Risk of lower French nuclear output, despite the recent rise above 40GW EDF may once more lower the production forecast with problems galore across the ageing fleet
The last month of 2022 saw a general decline in prompt markets amid softer fundamentals. Having said this, the month ended on a bullish note with prompt prices moving towards the further dated contracts. This was on the back of colder weather across the continent and a week of snow which was seen in places in the UK towards the end of December.
Temperatures across Europe were also hit lending to the bullish sentiment seen in the UK. The cold spell didn’t last long however, and prices quickly returned to normal.
Storage levels in Europe ended the year around the 80%-85% mark, a bearish driver to end a very volatile year on. Demand was further disrupted over the Christmas period with warmer temperatures still resulting in a falling gas price in both TTF and NBP.
LNG cargoes into the UK and Europe were stable throughout December amid lockdowns in China resulting in more vessels available for other buyers.
Looking ahead, we turn our heads to 2023 and a new buying year, hopefully to be less volatile than 2022 however this is likely to remain the case as the war in Ukraine continues. In the short term, weather forecasts for January continue to be a heavy bearish driver for markets seeing gas prices plummet in the first week of the year.
It’s worth mentioning however that we are only at the beginning of the winter season, so there is plenty of time for the weather to change resulting as well as gas prices. Another thing for traders to consider is the availability of LNG cargoes into the new year with China’s lockdown measures easing.