U.S. gas producer EQT is to cut gas production for March

Gas Market

There were wide intraday swings to NBP futures on Monday as early losses were recovered as European gas prices took a step higher. Gas prices received late support following reports that the U.S. gas producer EQT is to cut production by 1 billion cubic feet per day for March.  The company is reversing an earlier decision to boost output and gave low prices as the reason for lowering production. The front months of the NBP shed up to 2.00p early on and extended losses through the morning. April reached a low of 63.90p before gaining over 6.00p intraday to eventually settle slightly down from the high at 67.36p. The Summer-2024 contract traded between 62.75p and 68.25p before closing at 67.68p

Power Market

The volatile gas market caused a turnaround in GB baseload futures and carbon EUAs yesterday. The front month rose by £1.38/MWh to settle at £61.75/MWh.  Carbon EUAs also switched tack during Monday’s session as the Dec-24 was almost a euro per tonne down on Friday’s close but went on to settle at €57.16 posting a gain of €0.86 per tonne on the day. UKAs held onto early losses and contracts for 2024 and 2025 closed £1.10 per tonne down. Wind generation is to remain above the norm for the rest of the week and pressured the baseload prompt.  Losses were curbed by gains to the NBP prompt yesterday and the Day ahead contract settled £3.10/MWh lower.  

Oil Market

The confirmation finally came from OPEC+ and group has extended its voluntary production reduction of 2.2m barrels per day to the end of June.  OPEC+ announced its voluntary cut of 2.2mbpd for January 24, last November and they have extended cuts each month to March.  The market had expected this, and crude oil prices were not impacted, in fact Brent declined by 75 cents a barrel yesterday. Instead of the market being buoyed by restricted production, prices edged lower due to demand worries.  While China’s recovery is a concern, the mild winter has dented demand for U.S. heating oil which was evident in the recent EIA report which showed distillate demand for December was the lowest since June 2020.  Hopes of an agreement in the truce talks weighed yesterday although the meeting in Cairo went ahead without an Israeli delegation.  

Markets this morning

The reports of the U.S. gas producer EQT reducing production for March continues to raise concerns for U.S. LNG deliveries to Europe and natural gas markets across Europe have moved higher this morning.  The NBP curve is close to 3.00p higher with April last going through at 70.17p per therm.  The Summer-2024 contract last exchanged at 70.50p and has fallen from 72.12p, its high of the morning. Prompt prices have also ticked up with a short gas system boosting the Spot and Day ahead products. In the crude oil markets, the May contract for Brent is flat at $82.78 a barrel.