European gas hubs still in bullish trend as 'same story' continues to support pricing

European wholesale natural gas contracts continued to trade at record high levels during early exchanges Aug. 3, with market participants continuing to take direction from bullish fundamentals engulfing the market before easing lower in the afternoon.

"I really thought that the market would find strong resistance at 100 pence/therm, but it smashed through," a UK-based gas trader said.

Indeed, S&P Global Platts assessed the NBP Winter 2021 contract at 106.25 p/th (Eur42.413/MWh, $14.767/MMBtu) on Aug. 2, and was trading close to that level in early afternoon exchanges during the Aug. 3 session.

Pricing has been at record highs in recent months on the back of several factors (high Asian LNG pricing, lower Russian gas imports, below average storage stocks) that have brought a bullish mentality to valuations of the European gas hubs, with the TTF prompt and near curve above the Eur40/MWh mark for the first time.

"Always the same story," a Germany-based gas trader said of the recent increases. "It feels like I have not read bearish news for ages...no-one sees any bearish news on the horizon."

The first gas trader agreed, saying the market was "technically bullish, fundamentals are no different."

The second trader said the market was eyeing up several key areas in order to gather future price direction.

The first trader said: "Nord Stream 2, weather forecasts for the end of summer and early winter, and LNG. Those are my three watches."

The second gas trader was more specific in terms of fundamentals to be watched in the near-term, saying that "it feels like the current situation changed the gas market in Europe from oligopoly to monopoly. Feels like it is all in Russian hands at the moment and no-one can change it."

The first trader added that "I am bracing myself for further increases, but at some point this winter -- probably the latter side -- I think we may see a strong correction."