Freeport LNG partial outage to be extended two more weeks

Gas Market

European gas prices were buoyed by reports that the U.S. Freeport LNG facility will extend its current outage for a further two weeks. One of the three liquefaction trains at the Texas plant has been down for most of February and was expected to return at the end of the month. The front month peaked at 65.00p per therm but prices slipped back a touch before the close and March expired at 64.07p gaining 3.47p on its final day of trading.  The Summer-2024 contract receded from an intra-day high of 65.51p to settle at 64.23p.  Early forecasts for March are pointing to mild temperatures while storage gas reserves in Europe remain robust at 67% of capacity while the UK’s reserves are 68% full, meanwhile three LNG deliveries were expected at UK ports this week, so the outlook remains healthy.

Power Market

Support for baseload futures continued to arrive from higher NBP futures yesterday as the near curve racked up it fourth gain in succession. The March contract added £1.88/MWh to close at £60.50/MWh yesterday while the Summer-2024 futures settled at £60.50/MWh, up £2.00/MWh. The UK T-4 capacity auction confirmed a record clearing price of £65/kW/year for delivery in 2027-2028. Baseload for the day ahead remined flat on Wednesday as increased wind generation countered upward support from the NBP prompt.  Carbon EUAs for contracts out to 2026 added another 2.4% on average yesterday.  

Oil Market

Crude oil prices eased on Wednesday after the U.S. Fed confirmed there will be no interest rate cuts in the short term.  The front Month, April for Brent actually settled 3 cents higher but as this contract is due to expire, the May contract witnessed the lion’s share of trading activity yesterday and declined by 51 cents to $82.15 a barrel.  There were some hopes that interest rates in America would be decreased in March, but they are likely to remain unchanged for the next few months and this raised demand concerns. More pressure came from the Energy Information Administration’s latest weekly report which confirmed reserves of crude oil climbed by 4.2m barrels last week while gasoline stocks were down by 2.8m barrels. Losses on the day were limited by tensions in the Middle East which ran high despite the possibility of a truce being agreed soon.

Markets this morning

Near NBP futures have yielded some of yesterday’s gains as near months are down by between 1.00 – 2.00p per therm this morning.  April is the new front month and last traded at 62.13p while the Summer-2024 contract is down 0.83p to 63.40p. Gas demand is down to 224mcm this morning and is well below the seasonal norm but as is typical for the week, the system is forecast short by 8mcm.  Prompt prices are flat with just the Day ahead showing a minor decline of 0.10p.  Early activity in the carbon markets have seen EUAs fall by close to a euro per tonne.  Brent has continued to ease this morning and contracts are around 30 cent a barrel lower.