Ongoing strike actions at two Australian LNG facilities

12 September 2023

Gas Market

On Monday, UK gas prices began their ascent and continued to push higher throughout the day. This occurred in tandem with ongoing strike actions at two major Australian LNG facilities, perhaps exacerbated by Chevron’s request for regulatory intervention. The front month contract October hit a high of 94.11p before eventually settling at 89.81p, up 4.95p on the day. Gains were less pronounced further along the curve, with Summer-24 edging 0.36p higher. The prompt market followed a similar trajectory to the futures market. However, it was primarily influenced by extensions to Norway’s gas outages as export continued to slump. Maintenance at Troll gas field which holds 40% of Norway’s gas reserves was extended by two days. As a results, the UK Day ahead and Within day contracts gained 8.43p on average.

Power Market

On Monday, GB baseload power prices saw a marginal uptick, mirroring the movement in the gas market. The front month contract for October settled at £86.25/MWh, marking the third consecutive session of price gains. In line the UK gas market, the Winter 23 baseload contract is trading at a £4.45/MWh discount against the Summer 24 contract. Baseload for day ahead delivery ended yesterday’s session at £96.24/MWh, up £3.84/MWh. Limited movement was recorded in the European carbon market, with the Dec-23 contract closing at €81.87 a tonne, an increase of €0.25 on the day.  

Oil Market

Global oil markets saw an early surge yesterday, with the front month of Brent crude reaching a peak of $91.45 per barrel. However, as the day unfolded, the commodity lost its upward momentum and eventually settled at $90.64 per barrel. Notably, Saudi Arabia and Russia’s commitment to cutting supply continues to have a considerable influence in propelling prices upwards. The supply cuts implemented by oil rich nations have effectively offset concerns stemming from the subdued economic activities in China. It is worth highlighting that Brent crude hit its lowest point of the year in mid-June when it traded at $71.84 per barrel, marking a substantial discount of approximately $19.00 compared to the current price.  

Markets this morning

The UK gas market has opened relatively flat this morning, with the front month contract October last trading at 90.40p, up 0.59 pence from yesterday while Winter 23 last traded at 122.00p per therm. Currently, the gas system is experiencing a marginal undersupply, prompting an increase in storage withdrawals to 32MCM as an effort to restore balance to the system. The UK gas market will continue to monitor US Freeport gas flows, after a significant drop in flows over the weekend. The UK is a major destination for Freeport LNG cargoes. In the wider fuel mix Brent crude has opened higher this morning, last trading at $90.87 a barrel.  
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