* Spot averages Eur13.148/MWh over period* Q2 second half outturns Eur1.80 above first* End-H1 storage spreads at near Eur3/MWh
Dutch TTF Q2 16 averaged Eur13.148/MWh at delivery, marking a premium of Eur1.173/MWh to its expiry price, S&P Global Platts price data showed, driven by a spate of bullish events during the second half of the period.
The Q2 16 contract had expired at Eur11.975/MWh at a time when bears were in the ascendancy, with the mild winter and resulting storage overhang expected to depress prices at summer delivery (April 1 - September 30).
Indeed, the first half of Q2 played into this narrative, with the spot from April 1 - May 15 averaging Eur12.252/MWh, which was only slightly above the Q2 16 expiry.But sentiment reversed in the second half of Q2 fueled initially by heavy summer maintenance work on the Norwegian continental shelf and a pick-up in crude oil prices to over $50.00/b.
Bullishness consolidated through June as the market was hit further by the annual UK-Belgium interconnector outage, the suspension of operations at the UK Rough storage facility for repairs; and the Dutch government's preliminary decision to cut the annual Groningen gas field quota to 24 Bcm.
Consequently, the second half of Q2 (May 16-June 30) delivered at Eur14.025/MWh, which was almost Eur1.80/MWh above the first half of the quarter.
The combination of the Q2 16 delivered price and Thursday's Q3 16 expiry price of Eur14.275/MWh implies a Summer 16 delivery of Eur13.712/MWh, sharply higher than the latter's Eur11.95/MWh expiry price.
STORAGE SPREAD BOOST
However, bullish sentiment had an even more pronounced impact on contracts further out the curve, helping boost storage spreads.
The implied Summer 16 price at Q3 16 expiry stood at a discount of Eur2.939/MWh to the Q1 17 contract.
The spread between Summer 16 and Q1 17 at the expiry of the Summer contract on March 31 had stood at Eur1.80/MWh.
The value of storage depends on the size of the spread between summer and winter gas prices, with gas injected into storage in summer and withdrawn in the winter.
Winter 16 (comprising Q4 16 and Q1 17) was particularly affected by concerns over the availability of the UK Rough storage site this winter (October 1- March 31).
Rough operator Centrica Storage announced June 22 the cessation of all injection and withdrawal capacity at the facility until August 3 at the earliest after it identified an additional issue on a well during testing.
The Rough announcement came on the same day as the preliminary decision to cut the annual Groningen field quota from 27 Bcm to 24 Bcm for the 2016/17 gas year, which hit the front-winter contract given the new limits would apply from October 1.
Q1 17 is the highest-priced Winter 16 contract and reached a calendar year peak of Eur18.125/MWh on the Rough and Groningen news. However, prices came off strongly from these highs as participants responded nervously to the UK's referendum vote to leave the EU, suggesting volatility in prices and storage spreads will be a feature of the market during the remainder of the summer.
