Gas prices continued their decline on Tuesday despite a minor issue at the Hammerfest LNG plant in Norway.

Gas Market

Despite an outage at the Norwegian Hammerfest LNG plant that accounts for 5% of Norwegian annual exports, NBP gas prices continued to decline on Tuesday. Following the news of the outage prices moved briefly into positive territory in late morning trading. The front month traded up to 75.41p/th before a steady decline across the afternoon saw May-24 shed 2.5p/th at the close. All NBP contracts continued to unwind risk premium that had crept into prices over the last 4 to 5 weeks. The return of Nyhamna last week, and the impending return of the Texan Freeport LNG liquefaction plant helped ease concerns in the near term for natural gas supplies in Europe. This, coupled with the further de-escalation of tensions of further conflict between Israel and Iran is helping gas prices to continue their decline from recent 4-month highs.

Power Market

GB baseload prices tracked gas prices lower on Tuesday, as supply risk decreased following the return of Nyhamna last week, and the uptick in feed gas into the US Freeport LNG liquefaction plant over recent sessions. Reports indicate that for the first-time power generation from wind farms exceeded power generated from Fossil fuels in the UK for two consecutive quarters. Power generated from wind in Q1-24 accounted for 39.4% of the supply mix compared to 36.2% from fossil fuels. However, it is unlikely that the trend will continue with typical wind patterns suggesting a lull in wind generation across Q2 and Q3.  

Oil Market

European economic data boosted oil prices on Tuesday with business activity expanding at its fastest rate in almost a year. The oil market expects the positive business data to bolster demand for oil in the coming months. Brent crude increased back above $88/bbl closing at $88.42/bbl, while the West Texas Intermediate front month contract gained almost a dollar fifty across the session. Also adding to the upward movement was the announcement of an expansion to sanctions against Iran by EU Ministers, while the US senate is also expected to consider further sanctions against ships, ports and refineries that handle Iranian oil. The global impact may be minimal as the majority of Iranian oil is shipped to China, but it adds to the tensions in the Middle East once more.  

Markets this morning

Gas prices are trading higher in early trading this morning due to reduced flows from Norway due to planned maintenance at the Aasta Hansteen gas field. Despite the reduced flows the UK system remains well balanced with supplies marginally higher than forecast demand for the day at the time of going to press. The front month contract last traded 1.31p/th higher than Tuesday’s close and is retreating from the intraday high. Trading on the prompt is sparse so far with only day ahead trading at 73.75p/th. Brent oil has declined marginally following Tuesday’s large gains with official US data on oil expected this afternoon.