UK and European gas systems are slightly undersupplied this morning with a decline in LNG send out across the continent a major contributing factor.

24 January 2024

Gas Market Following Monday’s decline NBP gas prices stabilised on Tuesday, with prices moving sideways in a rangebound session. Prices for the front month oscillated between 65.75p/th and 68.59p/th closing before closing at a new two-year low of 66.75pth. The near curve contracts all followed a similar trajectory, while further on the curve the narrative was slightly contrasting. Although contracts from summer-24 onward were also rangebound, their closing price was marginally higher. On the prompt, prices were also little changed with demand suppressed by the increase in temperatures and strong wind power generation as a result of Storm Jocelyn.   Power Market GB Baseload power contracts continued their recent decline on Tuesday despite gains on the NBP and carbon markets. The front month a declined by 47 pence per MWh to £64.78/MWh while the front season also fell to £62.75/MWh. Positive news on the UK’s nuclear fleet helped to keep prices suppressed. A nuclear reactor has begun ramping up and expected to be at full production by the 25th of January, while a further two are on course to return by the 2nd of February. The latest data from European carbon auctions indicate that demand for carbon is low at present. Despite the lack of demand the Dec-24 contract added 86 cents as the EUA carbon market took direction from European gas markets.   Oil Market Tuesday saw a choppy day on oil markets as prices decreased marginally from Monday’s close. For much of the day prices traded in negative territory weighed by the news that Norwegian crude production had increased above expectations in December, with the fossil fuel rich nation producing 40,000 additional barrels per day. Adding some upward pressure to prices was news from the States that crude inventories had fallen by 6.7 million barrels according to the weekly report issued by the American Petroleum Institute. As trading continued on US markets late yesterday evening, the Front month contract eventually closed in negative territory at $79.55/bbl as production resumed at North Dakota oil fields that had been offline recently due to the subzero temperatures.   Markets this morning UK and European gas systems are slightly undersupplied this morning with a decline in LNG send out across the continent a major contributing factor. The recent storms had made docking at LNG terminals difficult for tankers and the ripple effect is a reduction in send out from regasification plants. There is also planned maintenance at the Karsto processing plant impacting Norwegian supplies. As a result, gas prices are strong this morning with the front month up by 1.90p/th at 68.65p. Additionally there are reports this morning that Qatar is delaying sending LNG to Europe due to security issues on the Red Sea, and at least 6 cargos have been diverted around Africa to avoid the route.