I've called in a favour and got my friend Andrea Paltrinieri (associate professor of banking and finance, Università Cattolica del Sacro Cuore, Milan, and Natgasweather analyst) - to give us his insights on European Nat Gas

"TTF natural gas prices explode this morning with the front contract touching euro 120 MwH, with a 30% increase compared to yesterday closure. it's currently trading around euro 114, and all the forward curve is firmly up after the recent Russia invasion. In less than a week the front contract has gained almost 100%. There are several motivations behind this increase, other than the classic geopolitical risk that all the analysts are pointing out. First, before the invasion, storage wise, the TTF situation is again problematic, with just milder weather across Europe during the last couple months saving this market from huge draws. LNG exports from US Henry Hub, although massive, cannot save this situation, given the maximum export capacity of around 14 billion cubic feet/day. This export doesn't involve just Europe though.

Then the invasion, with the potential sanctions. Now, for sure North Stream 2 pipeline will not be certified by Europe, and even all the firms involved in the construction will be likely targeted from sanctions. This pipeline was considered pretty important from Russia in order to deliver gas to Europe. Basically, no pipeline, high risk to lower gas delivery from Gazprom. The other important Yamal pipeline keeps the opposite trend of gas flows as well, from west to East. Obviously, this situation can be pretty critical for different countries, like Italy that rely on Russia gas for about 30% of total consumptions. Then, we need to really be careful about further sanctions like Russia SWIFT exclusion. We all know that Russia produces like 17% of world gas, then if we exclude them from the international payments circuit, how can we pay the gas they will deliver? If we consider also 10 mb/day of oil production, right now Putin is in strong position.

Finally, we need to consider other measures that can be taken after the invasion. US can block LNG exports, if Henry Hub prices explode, but it would not exactly great for Europe. Then another measure could be to persuade Qatar to give more LNG to Europe. Alas, they've already signed long term contracts with Asia and their spare capacity is pretty low.

That's why, right now, again, Europe has to pray for milder weather for a while."