Strike action commenced at Chevron’s Gorgon and Wheatstone LNG plants on Friday with industrial action set to step up to 24-hour stoppages from Thursday. The interruptions may not impact production for the first few days of the week but gas markets in Europe reacted to the news on Friday and near NBP curve contracts settled higher. October added 5.38p to close at 84.86p having traded up to 91.00p earlier in the session. Despite the gain of over 5.00p on the day, the front month was almost 2.00p lower week-on-week. The Winter contract added 2.20p on Friday but remained over 4.00p lower for the five-days. Extensions to maintenance works on Norwegian feeds continued to hamper gas imports and propped up the prompt.
The front months of the GB baseload futures market received support from gains on the near NBP curve on Friday following news that strike action would proceed at Chevron’s LNG plants in Australia. The two front months of October and November added £2.75/MWh & £2.85/MWh respectively while the Winter settled £0.88/MWh higher. Contracts past this eased marginally with pressure for lower carbon. Low wind generation continued to provide some upside to the baseload prompt. Wind generation averaged around 2.8GW last week which was well down on the annual GB average of 8.9GW. Baseload for Monday settled £3.60/MWh higher.
Crude oil prices switched direction on Friday morning with Brent going on to hit a fresh 10-month high as concerns of tight supplies increased. It is the highest settlement for Brent since 16-November last year. The global benchmark shrugged off support from a strong greenback on Friday and attention was refocused on tighter supplies after Saudi Arabia and Russia committed to continue the voluntary cuts of 1.3 million barrels per day until December earlier in the week. Saudi Arabia have pledged further voluntary cuts could be made to support prices if necessary. The demand side is heavily reliant on a recovery in China, but the latest data showed imports and exports from the world’s second largest oil consumer fell for August.
Markets this morning
The gas markets have opened with a bullish intent this morning with October, the front month for the NBP up 7.82p on the last trade. The Winter contract has yet to open but bid/ ask spreads are suggesting a 3-4.00p increase on opening. GB gas demand has increased to 147mcm, and the system is forecast to run 12mcm short according to the National Grid. Prompt products that have traded are higher with the Day ahead last exchanging at 93.25p up 9.15p from Friday’s close. Gas imports the Langeled remain curtailed with just 8mcm nominated this morning as maintenance continues. Brent is 17 cents down at $90.48 a barrel.