Europe’s diesel markets are flashing signs of tightness, with near-term diesel contracts on Tuesday hitting the steepest backwardation–a situation where futures contracts for prompt delivery are more expensive than those further down the curve–since March.
Backwardation is often interpreted as a sign of limited supply, with traders now willing to pay a premium for fuel that’s available sooner.
In contrast, Europe’s natural gas prices have pulled back sharply, with Title Transfer Facility (TFF) natural gas futures falling to €47.94 per megawatt-hour on Tuesday, down almost 20% from a two-year high of €59 hit on February 10th as shortage concerns eased.
Last week, Germany, France and Italy came up with a proposal to ease EU gas storage requirements in a bid to normalize the market. Under the current European Commission regulation mandates, all EU nations are required to refill their storage caverns to 90% capacity by November, with interim targets set for February, May, July, and September. EU gas storage is currently under 45% full, making it difficult to meet the requirement of 90% by November 1. That’s well below last year’s 67% mark at a corresponding point and…
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