Gas flows to one of the US largest LNG facilities Freeport were halted due to the extreme weather

Gas Market

 Gas prices increased due to a combination of factors. Gas flows to one of the US largest LNG facilities, Freeport were halted due to the extreme weather conditions in the US. The storm has also caused ports in the area to close, restricting LNG tankers’ ability to load at the facility. The uncertain duration of the issue pushed the February contract up by 5.26p to 126.61p/th. The issue at Freeport was not the only factor impacting prices as a proposed change to Germany’s gas storage regulation added to the bullish sentiment. The operator of the German Trading Hub Europe (THE) announced a plan to subsidise injections into storage this summer, guaranteeing a minimum price spread between summer and winter. This proposal in conjunction with the Freeport issue had a ripple effect across European markets, including the NBP, where the summer-25 price increased by 4.78p/th to 122.78p/th, compared to a winter-25 price of 118.76p/th.    

Power Market

Day ahead baseload prices surged to over £280.00/MW before settling at £278.00/MW, a day on day increase of £113. Wind generation was forecast to be extremely low, at 2.6GW approximately 80% below seasonal norms helped to spur prices on. On the curve a relatively mundane day was kicked into life following news of the cessation of activities at the Freeport LNG facility and the storage subsidy proposal on the German THE. On EUA markets the first half of Tuesday’s session saw the bears in control before the late rally on European gas hubs saw the majority of the morning’s losses retraced. At close of play the Dec-25 contact was relatively flat settling at €79.90/tonne.  

Oil Market

Crude oil continued its cautious retreat, with Brent’s front-month contract falling below $80/bbl, down from last week’s highs. Prices dropped by $0.58 yesterday, settling at $79.56/bbl, pressured by several factors. The dollar strengthened following comments from former President Trump regarding potential tariffs on Mexico and Canada starting February 1, with the strong dollar weighing on oil prices. Additionally, expectations of an end to Houthi militant attacks on ships in the Red Sea, resulting in the reopening of the Suez Canal, raised prospects of a short-term increase in oil supply, further pressuring prices. However, losses were limited by Trump’s pledge to refill the U.S. strategic petroleum reserves, which is expected to boost demand and support prices in the near term.      

Markets this morning

NBP gas prices remain elevated this morning, supported by the uncertainty surrounding Freeport. At present there is no definitive timeline for the facilities return to full operation. As a result, the front month February contract is oscillating close Tuesday’s settlement at 126.50p/th. The prompt is flat this morning on the back of continued low wind generation and a system that is marginally short. Brent crude is trading higher this morning following four days of consecutive losses, with some traders citing mixed signals from Trump’s proposals. The EUA allowance market is trading lower with the Dec-25 contract last trading €1.20/tonne lower than Tuesday’s close.   Yesterday in Summary NBP prices surged in trading on Tuesday supported by a closure of the Freeport LNG facility in the US due to storms in the area. Freeport is the single largest LNG export facility in the US. Adding to the bullish momentum was a proposed change to German gas storage regulation to further subsidise injections this summer. A strong US dollar weighed on crude oil prices as the front month continued its recent retreat from last week’s highs. the Mar-25 contract settled back below $80/bbl at $79.29/bbl. European allowance markets moved sideways having spent much of the day in negative territory before the upward momentum on European gas hubs impacted the carbon allowance prices.