Issues at an Australian LNG facility provided support to prices on Tuesday before prices declined in the afternoon

12 June 2024

Gas Market

Gas prices declined marginally Tuesday afternoon despite contracts trading in positive territory for much of the session. The Jul-24 contract traded up to 83.50 pence before a decline in late afternoon saw the contract fall to 81.09p/th. Prices were supported in early morning following news from Australia of an unplanned issue at the Wheatstone LNG facility. Repairs are ongoing at the facility that came to prominence last summer following a protracted risk of strike action by workers at the facility. However, prices soon took direction from the strong fundamentals in Europe and retreated, posting minor losses across the NBP curve. Across the Atlantic, U.S. Henry Hub front month prices increased by 7.7% supported by the EIA’s latest forecast of a cut in production while also forecasting growth in domestic consumption.

Power Market

The GB Day ahead baseload power contract soared by 14% yesterday following a revision downwards of solar output for the rest of the week. With 1.2 GW of nuclear power offline in GB gas fired generation is being priced in to address any potential supply shortages. On the curve the late decline on the NBP pressured the majority of near-term contracts, with Q3-24 falling by 50 pence to £74.75/MWh. However, bullish movement on the UK’s carbon allowance market pushed prices in 2026 and onwards into gains. European carbon prices tracked the TTF gas market for much of yesterday’s session with the benchmark Dec-24 contract posting a 50-cent loss, closing at €70.45/tonne.

Oil Market

Crude oil prices continued to recover from the 4-month low of $77.52 per barrel Brent fell to last week. Brent front month increased by 29 cents to $81.92, while WTI settled at $77.90. OPEC+ doubled down on its forecast of global oil demand growth, citing an increase in tourism and travel in the second half of the year as a primary driver of their projections. This follows on from OPEC+’s clarification last week on the unwinding of supply cuts in Q4-24 confirming that they will be unwound over the course of a year. Adding some further support to prices was the release of the U.S. Energy Information Administration’s forecast of oil demand growth which showed a further increase on the forecasts released previously.  

Markets this morning

A 7.7% increase in U.S. Henry Hub prices last night coupled with the issues at Australian Wheatstone LNG facility is providing support to NBP gas prices this morning. The front month contract last traded at 83.45p/th, a day-on-day gain of 2.37p/th. The winter-24 contract is currently offered above 100 pence per therm but has yet to trade this morning. Oil continues to climb this morning buoyed by yesterday’s optimistic demand growth outlook from both the EIA and OPEC+. The Brent contract for delivery in August has traded at a 92-cent premium to Tuesday’s closing assessment. The Dec-24 EUA contract is currently shrugging off the gas gains and is trading flat against yesterday’s assessment.