Relaxing US-China trade relations spikes gas market
Cooling US-China trade relations increased gas prices on Monday. The US announced on Monday that it was to lower tariffs of 145% to 30%, in response, China agreed to reduce tariffs from 125% to just 10% on US goods.
This sudden shift in policy from both sides could also open the way for Chinese importers to once again bid against Europe for spot LNG cargoes from the US.
China had recently banned imports of US cargoes in response to increasing tensions with the US, this reversal has the potential to stretch global supplies of the fuel over the crucial storage injection season.
Baseload power prices chased gas higher on Monday, amid a tightening demand outlook. Although wind generation rebounded from 3.7GW on Friday to 6.8GW across Monday, this uptick had a limited impact on easing longer-term market concerns.
UK power prices remain closely tied to gas due to its pivotal role in the power generation sector.
While wind can influence prices in the short term, its variability limits its effect compared to gas, which is reliable for balancing renewable output when needed.
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Price commentary courtesy of Crown Gas and Power 