Brief: TTF Erases 27% As Hedge Funds Scrap Bullish Bets

Mobius Intel Brief:

April ‘25 Dutch TTF erased over 27% from mid-February highs after warmer weather and regulatory uncertainty fueled the largest two-week drop in TTF spec length since March 2022.

Key Intel:

• Evolving plans to adjust the European Commission’s mandated storage targets alongside forecasts for warmer temperatures and higher wind generation have eased immediate concerns about the bloc’s third-largest season-to-date storage depletion (-2,125 Bcf) since 2011.

• Aggregate EU gas in storage expanded its Y/Y deficit to 914 Bcf and depleted to 40% of capacity on February 25—the lowest level since May 2022.

• Germany’s renewable fleet posted its worst monthly performance in nearly three years in February, putting additional pressure on gas-fired generators and cutting storage levels in the bloc’s largest economy to 36% of capacity by yesterday afternoon—also the lowest since 2022.

• The downside price risks from multi-year-high spec length highlighted on Feb 6 and Feb 13 Intel Briefs emerged as April TTF fell from over $17/MMBtu in mid-February to under $13/MMBtu today after the European Commission reiterated plans for more flexible storage mandates.

• TTF’s mid-Feb >$2 premium over JKM flipped to a ~60c discount this afternoon. Additional competition for LNG cargoes between Asia and Europe could rekindle supply concerns if Europe’s forecasts shift materially cooler before the end of winter ‘24-’25.

Looking Ahead

• Policy Shift: Germany’s Sunday election results reflected voters discontent with surging power prices and paralyzing regulations in Europe’s largest economy. Pro-business, pro-thermal generation parties captured over 119 seats from former Chancellor Olaf Scholz’s anti-gas, anti-nuclear traffic light coalition, adding upside to Germany’s gas demand outlook for the next four years. Less restrictive energy and industrial policy in Germany could pass through to the broader EU and similarly support incremental demand growth as US-EU trade negotiations begin.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation with respect to the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is exclusively intended for Mobius clients and is not considered promotional material.