Dutch Title Transfer Facility (TTF) gas prices fell by 42% to EUR 5.18/MWh between 2nd March and 23rd June 2020, in line with higher Liquefied Natural Gas (LNG) flows and a reduction in demand due to unusually mild weather at the beginning of 2020 and then the coronavirus outbreak.
European LNG imports hit record highs of close to 11 million tonnes (Mt) in March, as the region absorbed global oversupply at a time of declining demand. The increasing imports have in turn had a knock on effect on storage inventories. Gas storage in Europe is currently above the five-year historical average and therefore weaker storage injection demand is expected for the remainder of the summer. Low storage injection demand creates further bearish sentiment on TTF markets.
Weather driven demand data found that the US, Asia and Europe experienced higher than average temperatures during the winter of 2019-2020, this in turn reduced gas demand for heating and led to lower gas prices globally. Heating demand was 12% below the 10-year average for the US, 14% lower in Asia and 13% in Europe. In addition to warmer winter weather, the lockdowns around the world and the reduced economic activity led TTF prices to reach historic lows.
TTF gas markets are expected to remain bearish for the remainder of summer and are projected to rise in Q4 2020, in line with an uptick in winter gas demand.