Gas futures prices surged higher on Wednesday
Gas futures prices surged higher on Wednesday as the outage at the Troll field will run on for longer than originally touted on the Gassco website. Around 30MCM of supply has been impacted due to a compressor issue, the Norwegian system operator had expected the repair to only last a day or so. The EU is to consider the next round of sanctions should Russia resort to the use of chemical weapons in Ukraine and leaders are holding meetings this week. They are also committed to boosting natural gas storage supplies for the coming winter in order to be less reliant on Russian gas supplies. In a frenzied afternoon trading session, the April contract traded up to 315.29p before slipping back to close at 277.50p, gaining 43.90p on the day.
The surge in natural gas futures fed into the baseload power curve
The surge in natural gas futures fed into the baseload power curve yesterday leaving the front month to close £29.90/MWh higher at £239.40/MWh. The forecasts for lower temperatures and below average wind generation are pointing to tighter supply margins from next week and the prompt also settled higher yesterday. Baseload for the day ahead added £7.92/MWh or 4.0% to settle at £204.92/MWh. Wind generation is forecast to fall below 1.0GW for Thursday and remain at low levels for the remainder of the week, leaving the gas fired generation to make up the lion’s share of the UK power stack.
Storm damage caused disruptions to the Caspian Pipeline Consortium
There was another sharp rise in crude oil prices on Wednesday after storm damage caused disruptions to the Caspian Pipeline Consortium, a key oil supply pipeline for Russia and Kazakhstan. Crude oil flows through the pipeline on the Black Sea stopped completely yesterday and the damage may take over a month to repair. The pipeline carries 1.2m barrels per day of crude from Kazakhstan which is about 1.2% of global demand in an already tight market. President Biden is to meet with EU leaders on Thursday to discuss the next level of sanctions for Russia with energy a key point in the discussions. Brent settled $6.12 a barrel higher at $121.60 a barrel.
The gas markets have opened stronger this morning
The gas markets have opened stronger this morning with the front month last trading at 290.00p, which is down from the morning high of 294.14p but up 12.50p on last night’s close. The summer contract is 12.83p higher at 294.00p while contracts past this are around 5.00p higher. Prompt prices have also opened higher by around 10.00p, with the day ahead last trading at 245.00p. Crude oil prices have flip-flopped between gains and losses and Brent is currently flat at $121.75 a barrel just 15 cents a barrel up on Wednesday’s close.