NBP futures released premium gained from the two previous sessions on Wednesday as the market awaited news on the talks between Woodside Energy and unions to avoid strikes at Australia’s largest LNG facility over wages and conditions. There was a sharp downturn in prices in the morning session as Australian media cited a Chevron spokesperson as saying that the company would look to circumvent unions by tabling a pay offer directly to workers in the coming days and reports that some LNG facilities within Australia could offset any loss in production at sites were workers are striking. In another volatile session, the front month September contract traded as high as 106.51 pence per therm and as low as 87.9p, eventually settling at 92.32p. On the prompt, a well-supplied UK gas system resulted in an average of a 15.90p decline in the spot and Day-ahead contracts as an increase in storage withdrawals offset a drop in LNG send out.
GB baseload futures came off two-month highs on Wednesday as a result of the risk premium eroding from both the UK gas market and carbon futures. The front of the curve bore the brunt of the losses with the October contract shedding £11.28/MWh to settle at £100.98/MWh. The Day-Ahead contract settled at its highest level since April at £112.90/MWh up £6.66/MWh over the session supported by muted renewable output. After briefly trading as high as €90.24 a tonne, the Dec-23 EUA carbon contract took a hit, settling at €88.00/t, down two euro a tonne day on day due to the heavy losses in the TTF gas market amid ongoing Australian LNG worker’s strike talks.
Crude oil prices continued to slide on Wednesday as demand woes stemming from a build in U.S. gasoline stocks and weak manufacturing data globally outweighed optimism around a larger-than-expected drop in crude stocks. U.S gasoline stock climbed 1.5 million barrels last week, compared with analysts forecast of an 888,000-barrel drop. However, U.S crude inventories fell by 6.1 million barrels in the week compared to analysts’ estimates of a 2.8-million-barrel drop, helped by strong refining activity and high levels of exports. Manufacturing data from around the globe came in below expected as Japan reported shrinking factory activity for a third straight month and Eurozone business activity also declined, particularly in Germany. The Brent October contract settled down 82 cents or 1%, at $83.21 a barrel after being down as much as 2.5% earlier in the day.
Markets this morning
NBP futures extended losses this morning as news broke that Woodside Energy reached an in-principle agreement with unions at Australia’s largest liquefied natural gas project, potentially averting a disruption to supplies. The September contract has traded as low as 74.5 pence per therm in early trading and is currently trading at 81.70p, down 10.62p on the day. Contracts further out the curve are seeing similar declines with the Winter-23 contract trading 10.79p lower in the session. On the prompt, The Day-ahead contract is trading down 10.05p despite the UK gas system opening relatively balanced. Brent crude oil has opened fractionally higher, up 22 cents a barrel early doors.