Gas markets spiked on Tuesday due to renewed concerns for LNG supply

Gas Market

Gas markets spiked on Tuesday due to renewed concerns for LNG supply originating in Australia. Near curve prices took the brunt of the increases as the front month September hit an intraday high of 102.01 pence per therm before falling off slightly before the close, being assessed at 98.43p, an increase session on session of 11.6p. The front season also saw an intraday spike before backing off just prior to the close. The contract added 10.7p day on day. The threat of strike action in Australia loomed over the market across the day following meetings between unions and facility owners. Uncertainty still remains, with no definitive result from the meetings. Facility owners wish to issue an offer directly to employees to vote on, while the unions are urging the employees to reject the offer and to vote for strike action.

Power Market

Spot GB Baseload contract pushed higher on Tuesday due to faltering wind generation and the increase in day ahead gas prices. Wind generation is currently forecast 10-20% below seasonal norms. The risk of strike action at the Australian LNG facilities also weighed on GB baseload curve contracts with the gains from the NBP curve feeding through.  A choppy day on carbon markets saw the Dec-23 contract open at €88.24 per tonne. The contracts then traded largely sideways, before declining from midday. The Dec-23 contract hit intraday low in early afternoon, but rebounded again to above €87 per tonne

Oil Market

Oil markets declined by over 1.5% with Brent losing $1.32 per barrel closing Tuesday’s session at $84.89. Supply cuts by Saudi Arabia and Russia have helped to strengthen the oil market over the past seven weeks, but some of that impetus has been lost over the last two sessions. Industrial output and retail sales data from China on Tuesday has indicated that their economy has slowed further. This has intensified pressure on already faltering growth and prompting authorities in China to cut key policy rates to help bolster economic activity. China is the largest importer of oil, and any drop in economic data will impact global demand.

Markets this morning

Following yesterday’s sharp increase, the NBP is beginning to unwind some of the premium put into the market yesterday. While the situation remains on a knife edge, premium was added yesterday without any firm change in supply fundamentals. Hence, we have seen 2.43 pence per therm fall out of the front month in early trading. Trading on the prompt is minimal so far, with prices there holding firm to last night’s close due to a short system. Oil markets have traded sideways this morning following yesterday’s decline as the market assess the continued weak data from China.  

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