Talks to avert LNG strike action have broken down

Gas Market

The gas markets across Europe remained on edge yesterday as talks continued between unions and management to prevent industrial action at Chevron’s LNG plants in Australia.  NBP futures traded back and forth through the morning session, but it was the front month that experienced the most volatility as October traded between a high of 81.19p to a low of 74.34p over the day.  At the close, the front month settled near the peak of the day at 79.48p, up 4.17p from the previous close.  This increase was closer to gains seen on the prompt as futures past October, generally settled between 1.00p to 2.25p higher yesterday.  Gas nominations through the Langeled feeder were close to zero yesterday, reflecting the extended maintenance works and the Spot and Day ahead products rose by 5.00p. This may have been more if demand wasn’t subdued due to the hot temperatures.

Power Market

GB baseload futures continued to track movements on the NBP curve yesterday with near contracts averaging gains of around 1.6%.  The October contract was traded the heaviest and settled £2.00/MWh up at £80.00/MWh.  The Winter posted a gain of £1.38/MWh yesterday reversing some of the previous sessions’ significant loss.  The Spot for carbon EUAs settled 70 cent lower at €81.88 per tonne. Wind generation is forecast to fall below 1.0GW for Friday which propped up the Day ahead product yesterday.  Gains on the NBP prompt counterpart also added some upside yesterday as the Day ahead close at £88.82/MWh.  

Oil Market

Brent slipped below the $90 a barrel marker yesterday as weak economic data and a strong dollar weighed. The global benchmark spent just two days above this strategic mark this week after Saudi Arabia announced they intend to extend their voluntary production cuts to December while Russia have committed to cut exports.  The last time Brent traded above the $90 dollar mark was back in November last year, and from then the global benchmark has weakened to the low of $71.84 a barrel in mid-June.  Brent for November delivery settled at $89.92 a barrel yesterday, falling 68 cents after economic activity in the euro zone grew by just 0.1%. The dollar hit a three-month high against the euro and the pound yesterday, a stronger dollar increases the cost of dollar denominated commodities to holders of other currencies.  

Markets this morning

Talks to avert strike action by union workers at Chevron LNG facilities in Australia have broken down over night. The dispute could disrupt LNG output from Chevron facilities which meet around 5.0% of global supply.  The UK gas markets have opened stronger with October 7.42p up at 86.90p on the last trade. The Winter contract is at 123.01p, showing an increase 4.67p this morning.  The prompt looks like opening between 2.00-4.00p higher but no deals have been agreed so far. Brent has continued to ease, and the November contract is exchanging at $89.69 a barrel.  

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