Gas Market
UK NBP gas contracts rose on Thursday, supported by LNG supply concerns, heatwave related risks, downward revisions to wind generation. Reports that QatarEnergy extended force majeure to one Asian buyer into August, alongside the previously announced extension affecting deliveries into Italy, raised concerns over LNG availability in Europe. Higher European temperatures also increased the risk of reduced French nuclear output, should river temperatures breach regulatory thresholds, while prompt prices were also supported by a downward revision to wind generation on Friday. For the first time in nearly two years, less than half of U.S. LNG exports last month went to Europe, as stronger Asian prices and record Egyptian imports diverted cargoes. EU LNG imports for June were 18% below last year, with higher Asian premiums, rather than Qatar, now the main driver rerouting cargoes away from Europe. Front month NBP gas rose 2.82p to settle at 104.51p/therm, while the day ahead contract rose 4.3p to 105.8p/therm.
Power Market
GB Baseload contracts tracked gas prices upward, with the front month Aug-26 contract rising £1.5 to £94.75/MWh. A sharp decline in Britain’s wind generation on Friday supported Day-ahead prices, with the contract rising £35.4 on the day to £91.35/MWh amid a 5GW fall day on day in Wind generation.
The EUA market remains in a holding pattern around the €80/t level, with participants reluctant to take strong directional positions ahead of the European Commission’s ETS Review proposal on July 17th. The Dec-26 EUA fell 0.11%, closing the day at €79.45/tonne.
Oil Market
Oil prices edged higher on Thursday after touching a four-month intraday low earlier in the session, as fears of supply disruption eased following news that Iran and the U.S. had made progress in Strait of Hormuz talks, according to Qatar. Front-month Brent settled up 23 cents at $71.80/bbl, recovering from an earlier low of $70.54/bbl, down $1.03 on the day. A spokesperson for Qatar’s Foreign Ministry said the talks had made “positive progress” on the memorandum that halted the war in June. At least five supertankers carrying a combined 10 million barrels of Saudi oil have exited the Strait since Aramco resumed loadings from Ras Tanura, the world’s largest oil port, on Friday, ending a nearly four-month halt. Aramco is now ramping up shipments to Asia. Meanwhile, U.S. petroleum inventories, including the strategic reserve, fell by another 6 million barrels in the week to June 26th. Stocks have dropped 164 million barrels since March 20, compared with an average seasonal build of 48 million barrels over the prior decade. Total stocks now stand at their lowest level for this time of year since 2003, sitting 319 million barrels (17%, or 1.82 standard deviations) below the ten-year seasonal average.
Markets This Morning
Energy markets are muted this morning, with near curve NBP contracts up an average of 0.04p/therm amid a comfortable UK balance, as markets await further progress in peace talks before the long U.S. holiday weekend. The next Iran U.S. meeting is set to take place after Iran’s state funeral processions for the late Supreme Leader Ayatollah Khamenei conclude on July 9th. Front month Brent crude is flat, up a marginal 4c, with U.S. markets closed Friday ahead of the Independence Day holiday on Saturday.
