Gas supply concerns shift towards the winter

Strong LNG imports across the past few months (heralded by strongly negative JKM/TTF spreads) have helped European gas storage levels recover close to seasonal normal levels. As injection demand eases, the front of the curve (S22-W22) has flipped back into contango.

Supply concerns now focus more on this winter. Russia have cancelled gas pipeline contracts to the tune of ~20bcma within the past month (latest being GasTerra, Orsted & Shell Europe) due to the Rouble payment demand. TTF remains above the anchor of the coal switching range out to 2024, as limited additional LNG supply to alleviate the new market regime is able to come online before the middle of the decade.