European Gas prices bounced modestly, with TTF up 2.3%, after aggressive speculative selling pushed the market toward long-run marginal cost levels. This pressure comes even as EU storage sits well below its five-year seasonal average, ING's commodity experts Ewa Manthey and Warren Patterson note.

Speculative selling pressures TTF despite below-average EU storage

"European Gas prices appear to have found a floor, bouncing higher yesterday; the Tittle Transfer Facility (TTF) settled 2.3% higher. The European Gas market has been under significant pressure, amid aggressive selling by speculators. This is despite EU Gas storage recently falling below 72%, compared with the 5-year average of 82% for this time of year."

"The weakness in TTF should lead to slower LNG flows into Europe, with JKM’s premium to TTF widening in recent weeks. Meanwhile, the broader weakness in Europe has seen Gas prices trading down towards the long-run marginal cost for US LNG producers. If these price levels persist, they will likely raise more questions about the viability of pre-final investment decision export projects."