May in European gas
May was the calm after the storm for European gas prices, producing a relatively quiet month as many traders watched on from the sidelines scratching their heads.
The move down was ferocious and combined with it still being early in the year and in a very volatile macro environment, it wasn’t surprising that we did see a muted recovery in prices. Data and market chat suggests it was funds and R2D2’s behind the move up and that probably isn’t a surprise to many either.
Apart from the severity of the down move, the main drivers came from scheduled and unscheduled Norwegian outages and Trump’s temporary reprieve on tariffs, particularly with the Chinese. This led equities markets to rocket back to near highs with careless abandon and offered a shot in the arm to lots of commodities as well.
The market couldn’t ignore the absence of a rather large Chinese elephant indefinitely though and we finished the month with a reasonably spectacular puke. China’s 2025 LNG take continues to disappoint and with all that extra LNG destined for European storages, gravity bought May to a close with a thump.
Going forwards we are probably still too early in the summer for a massive price dump, but sentiment has certainly changed wholesale from the bullish days of early February. This coming winter is the last one where anyone sees any real danger and with the curve in backwardation every molecule possible should be pointing towards the front of the gas curve.
The near removal of the EU storage rules have also removed Bertie Bull’s favourite ratchet tool and the macro picture is still extremely shaky. Trump’s original tariffs will soon be feeding through to market data and he doesn’t seem that happy with the Chinese either. Trump Tariff Day 2 at the start of July will be extremely interesting and going into that long anything other than volatility is a brave move indeed.
For Bertie bull more Norwegian maintenance and the global situation does offer hope as political unrest continues to dominate the world. Trump’s quest for the Noble Peace prize isn’t looking great, with Putrid playing him like a fiddle, the Iranians understandably saying no to US proposals on Uranium and the horrific carnage continuing in Gaza. He also faces battles at home to implement his current and future tariffs and a large slice of congress wanting to impose 500% penalties on his bestie in the Kremlin.
Overall the situation in all markets remains tense and with traders not having the best year in general, it probably isn’t a time to don your superhero outfit. I had one year when my P and L went negative and its just a case of trading more defensively, staying disciplined, remembering what your good at and upping your confidence levels when entering a trade All traders lose money at some point in their career and getting back into the black is probably going to take longer than you would like and involve some down days along the way. If you do the right things, it will happen eventually and you will come out of the other side a much better trader for the experience.