August in European Gas

Yogi was firmly in the driving seat for August, with a brief upwards interlude when it became clear that Vladimir Puturd had once again bought himself some time and hood winked Donald, who hadn’t bothered to take a map to the meeting. 

I don’t mind admitting that I was actually one of the believers that thought an agreement was close and may well have been done if Europe hadn’t stepped in.   The targeting of Ursula’s plane yesterday and British and European buildings being hit in Kiev would also offer evidence to back that view.  

Despite all the above I actually do still think we are currently a lot closer to some kind of peace than the WW3 media frenzy would lead us to believe.  It feels that Europe is essentially a side show/nuisance for Donald, with the main prizes being another war cessation for his CV and the re-opening of trade relations with the Russians. 

As for Russia and Ukraine, the current situation is a lose bad for one/lose even worse for the other and is simply unsustainable in the long term for either of them. 

War aside, the market felt undoubtedly bearish, with the forthcoming glut of LNG casting a very large shadow over anyone with bullish tendencies.  The prolonged and extreme summer heat in Asia didn’t result in a massive uptick in LNG demand and with summer starting to wind down, Yogi got his bat out.

A combination of momentum, increased optimism and the new worlds tendency to massively overshoot saw us fall to hard, to fast and subsequently we had a fairly decent bounce once missiles and rhetoric began to fly again.  The bounce was fairly short lived though and with no real change to fundamentals and the headlines easing, gas once again began to fall back to earth.

There was one final sting in the tail, which saw previously sanctioned Artic 2 cargo’s heading for China.  This was despite no Ukrainian resolution or clarity from anybody as to why it had happened (DT done a secret deal with the devil?).  Unsurprisingly though, the end result was a very weak finish to the month, with prices hovering just above previous lows of the month.

Despite the predicted overhang taking place from Q2-2026 onwards and some sustained physical selling into the curve, it was actually the Q1-2026 that came off the most, ending the month down just over 3 euros.  On the spread side the S26-W26 gave up some ground, but the main losers were the S26-S27 spread and also their Winter equivalents. 

For bears investing their bullets in the front spreads, the month went considerably less well, with Oct-Nov actually contracting during the flat price demolition.  Is this potentially a sign that we won’t be reaching tank tops and dislocation after all in Oct or just an influence of the heavy September Norwegian maintenance programme? 

I do think it would take something more than a slightly tight Sep and Oct to reverse the current bearish tide completely.   Cold very rarely turns up significantly before mid to late November and so I feel it would take something geopolitical with actual fundamental consequences to give Bertie Bull a fighting chance in the short term.

#trading #eurogas #Yogi