Proposed strike action casting a wide shadow across European energy markets

23 August 2023

Gas Market

The proposed strike action at the Australian LNG production facilities is still casting a wide shadow across European energy markets. Another choppy session on the NBP saw front month prices trade in a 13.8p range, peaking at 111.33 pence per therm having traded as low as 97.55p.  Just before the close all contracts gave up value as the contracts fell from their peak with Sep-23 being assessed at 106.1p/th. Winter-23 gained 1.76p from Monday’s close, with the largest price move being focused on Q4-23 reflecting the risk to near term supplies that the strike holds. Summer-24 onwards were relatively flat session on session, further highlighting the markets believed that the strike action will likely only be short term in nature impacting near term delivery periods.  

Power Market

GB baseload prices all experienced an increase across Tuesday’s session as price movements on the NBP filtered through to the power market. Adding additional pressure to power markets was the increase on carbon markets. UKA carbon for December 2023 and 2024 increased by an average of 10.4%, while the EUA December-23 contract increased by 2.5% which all added further support to far curve power contracts. Day ahead increased by £11.50/MWh due to a drop in wind generation. Power generated from wind asserts is expected to drop 67% to levels 20% below seasonal norms.  

Oil Market

Brent crude fell by 36 cents on Tuesday as the malaise in Chinese economic data once again influenced crude prices. The data has indicated that China has yet to fully experience a post covid rejuvenation, and any economic stimulus promised has thus far fallen short of expectations. The global fall in demand for oil as a result has all but negated the cuts in output by Saudi Arabia and Russia. China is the second largest consumer of oils, and the largest importer with its demand for oil a major influence on global markets. Elsewhere the US has failed to rule out further interest rate hikes which could signal waning demand for oil in the States.  

Markets this morning

The UK gas system has started the day well supplied resulting in prompt prices falling by 5p per therm. The front month September contract opened 1.8p per therm lower this morning, with losses posted against any contract that has traded at the time of writing. Winter-23 has seen a slight decline of 0.75p per therm, with no trades further on the curve than the front season. Oil is continuing its three-day decline, with over a half a dollar stripped from the price in early trading.  
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