Gas markets await implementation of peace talk commitments as currency stand off continues - Rystad Energy

Here is Rystad Energy’s daily gas and LNG market note from senior analyst Vinicius Romano:

The first meeting in two weeks between Russia and Ukraine to discuss peace today affected market sentiments.

After a morning of hiking prices due to low expectations of progress on the peace talks and high uncertainty around future Russian flows, prices declined slightly as Russia agreed to ‘drastically reduce’ military activities at the Ukrainian capital Kyiv. 

However, as has happened several times during this conflict, the market is unlikely to make any drastic moves until such a declaration is implemented with on-the ground action. 

As such, the TTF remains rangebound in the 105 EUR/MWh to 110 EUR/MWh range, eagerly awaiting further direction. 

Gas markets are still anxious in expectation of clear rules of rubles payment by Thursday.

Both sides remain at odds over the prospect, of changing the currency terms of dollar and euro contracts, waiting for the other side to blink first.

So far Russia has threatened to cut supplies if they are not paid but current gas price levels do not reflect this possibility.  

However, Russia’s insistence on rubles begs the question as to which currency they wish to receive once sanctions take full effect: rubles or euros.  

Fundamentals are not very bullish today, but sentiment is driving the market volatility.

With the CPC pipeline outage, Kazakhstan is expected to cut 320,000 barrels per day until end of April.

This reduction in volumes will be considered part of Kazakhstan’s production quotas for OPEC and should be compensated in future months but there is no sign of other producers increasing supply in the short-term, which is likely to support oil prices.  

Asian LNG buyers have retreated from the market as prices reached U$ 36/MMBtu yesterday, weakening demand responses.

Power in Germany remains tight with lower wind output and the announcement of a prolonged outage on French nuclear reactor Dampire 1 until March 31.

Daily gas flows from Russia and Norway remain stable, even with the unplanned outage of 5.5 MMcmd from the Norwegian field Skarv.