UK gas market staged a significant recovery during trading yesterday
The UK gas market staged a significant recovery during trading yesterday as prices firmed across the curve on report that the Freeport LNG terminal in Texas would not return to full production as previously planned. Reports have emerged that the terminal which was subject to a fire earlier in the Summer. The terminal which provides 20% of US LNG production has closed one train and this will not be fully operational until the end of October, a four-week delay. The gas market easily recovered the losses from the previous session and pushed higher still. The front month September contract added 52.42p to close at 546.78p while Winter 2022 closed at 708.085p, up by 50.35p.
GB baseload futures market recover the losses from the previous session
The GB baseload futures market recover the losses from the previous session and pushed higher still as the gas market reacted to the delayed return of the Freeport LNG terminal from repairs. The gains in the power market were somewhat constrained by an easing of UK clean spark spreads. The Winter 2022 baseload power contract is now priced at £749.50/MWh, up by a further £47.50. The day ahead baseload power contract was also impacted as wind generation levels remained below the seasonal norm and the system supply margin tightened.
The Brent crude contract established a firmer footing above the $100 a barrel
The Brent crude contract established a firmer footing above the $100 a barrel market as gains were extended during the session yesterday. Prices for crude were higher from the outset and at no stage did the benchmark fall to far into negative territory. The trading range was just over two dollars with the Brent contract for October delivery settling at $101.17, up by $0.95. The data in the latest US Energy Information Administration weekly inventory report was also price supportive as a large draw down on crude oil inventories was reported. On the other side of the equation reports that Iran could return to the market increased was a positive development.
Freeport LNG terminal outage will be extended by a further month
The UK gas market has opened with huge increases this morning as the news that the Freeport LNG terminal outage will be extended by a further month continues to drive prices. The September contract is up by 60.39p at 607.17p while the Winter 2022 contract has added 86.00p and is priced at 795.00p/therm. The market is also experiencing wide bid/offer spreads as volatility on all contract periods is the norm. Gas fundamentals in the UK this morning are positive with the supply/demand balance operating at a surplus of 5MCM. Crude oil markets have opened firmer this morning with prices for Brent crude up by seventy-one cents.