Norwegian supply issues increases gas prices

Severe Norwegian capacity restrictions propelled gas prices to year-to-date highs on Monday.

Contracts opened firm on news of renewed supply risks and continued to gather strength throughout the session, this included the Winter-24 front-season contract which managed to break out of the now familiar range established over the past couple of weeks, trading at its highest level so far this year and leaping as much as 8p/therm (0.27p/kWh) higher day-on-day before softening into the close.

The weekend brought with it news of a complete shutdown at Norway’s Sleipner field, with offshore operator Equinor reporting that a crack had been found aboard one of the fields several platforms. This has resulted in 79.9mcm/d of supply being taken offline indefinitely and all flows to the UK via the Langeled pipeline have been suspended as the Sleipner field serves as a connection point for the North and South sections of the pipeline.

It’s unknown when the issue will be resolved and although low demand is helping to offset falling supply in the short-term, our 14-day model shows that demand will move to above seasonal norms from tomorrow (5th June) so a prolonged outage at Sleipner could put serious strain on UK supplies.

Natural gas prices have opened slightly lower this morning, with the July 24 front-month contract currently being offered circa 0.5p/therm (0.017p/kWh) below its previous settlement, at time of writing.

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