Another month of strong Russian supply curbed storage withdrawals in Central Eastern Europe (CEE), increasing the y/y inventory surplus by 1 December. HDDs across most of the region averaged 6% lower y/y but were higher than the five-year average. The exception was Austria, where HDDs were up slightly y/y and the highest since at least 2007.
Once again, strong Russian flows into Germany via Nord Stream were a major driver behind supply fundamentals last month. For the second consecutive month, gross Russian flows into Slovakia via Velke Kapusany fell sharply y/y (by 0.56 bcm, 12%), totalling 4.30 bcm, which resulted in Slovakia cutting reverse flows to Ukraine by a chunky 0.48 bcm y/y (38%) y/y to 0.77 bcm and leaving net Ukrainian supply down by just 80 mcm (2%) y/y at 3.52 bcm. But while Slovakia’s takes via Velke Kapusany fell, the country’s net imports were higher y/y owing to a sharp rise in receipts from the Czech Republic. The latter increase came thanks to the strong Nord Stream flows, resulting in high gross German exports of 3.3 bcm into the Czech Republic (+0.7 bcm, 27% y/y). The Czech Republic in turn made exports of 0.43 bcm to Slovakia, having made none in November 2016. Reverse flows into Ukraine from the Czech Republic were 40 mcm, compared to zero the same time last year.
Likewise, strong net flows into Slovakia supported a 0.39 bcm (11%) rise in Slovak exports to Austria, which then sent Hungary 0.33 bcm, 7% more y/y. A 0.22 bcm (50%) y/y rise in Austria’s net imports helped slow the country’s stockdraw. Austrian stocks fell by 0.53 bcm, 0.33 bcm (47%) less y/y.
While Russian flows transiting Ukraine into Slovakia slowed y/y in November, net Ukrainian supply to Hungary jumped by 0.12 bcm (24%) y/y to 0.63 bcm. Net stockdraws in Hungary were up by 50 mcm (12%) y/y. Exports from Ukraine into Poland were largely flat y/y at 0.35 bcm.
The Baumgarten region pulled 1.87 bcm from storage last month, 0.68 bcm (27%) less y/y. As of 1 December, stocks stood at 20.3 bcm, up by 1.8 bcm y/y. Ukrainian stocks stood at 16.1 bcm, up by 2.6 bcm y/y.
The TTF-AVTP D+1 basis averaged -22 cents/MWh in November, much narrower than the -1.30 €/MWh it averaged the month before but almost unchanged y/y. Last month’s trend that saw milder y/y weather in Northwest Europe was even more pronounced in CEE. TTF prompt prices may have found some support from both LNG availability and Dutch production being lower y/y, helping keep the Dutch market tight. We expect these dynamics to continue, with the AVTP winter premium unlikely to deviate too far from last year’s level, but be high enough for the hub to draw gas from the northern markets to balance.