European natural gas prices fell nearly 2.4% on Wednesday, weighed down by reports of peace talks between the United States and Russia although cold weather is accelerating storage drawdowns, ING commodities experts Ewa Manthey and Warren Patterson noted.
Short shorts increase the risk of compression
“European gas prices also traded lower yesterday, with the Transfer of Title Facility (TTF) down nearly 2.4%. Reports of peace talks between Russia and the US weighed on prices. However, cold weather has seen gas storage decline at a faster pace over the past few days. EU gas storage is now 81% full, down from a peak of just over 83% in mid-October.”
“Meanwhile, the latest positioning data shows that investment funds reduced their net long positions in TTF by 8.7 TWh to 15.6 TWh, the smallest net long since March 2024.”
“This was driven by new shorts entering the market, with total selling rising by 19 TWh to 434.3 TWh, another record selling total. It leaves the market vulnerable to a surge in short covering in the event of any supply surprises or extended cold spells over the winter.”
