Wholesale prices dragged in both directions triggered by geopolitical tensions
Day ahead natural gas prices were dragged in both directions on Wednesday as market participants weighed geopolitical tensions against positive news regarding Australian LNG strikes.
Contracts had initially opened in positive territory when compared to their previous close, however mid-morning trade saw a swift change in direction with most heading back towards their previous settlement. This change in sentiment was however short lived and a late afternoon rally resulted in the Summer 24 front-season contract closing circa 0.17p/kWh higher day-on-day.
Over the past couple of weeks, reports of fighting between Israel and Hamas have dominated global news and European energy markets are understandably on edge due to the region’s heavy reliance on Middle Eastern oil exports. A possible disruption to oil supplies has resulted in a net increase of circa 6.5% on the Brent Crude benchmark contract over the past week, adding support to contracts further out (data from ICE).
Bullish sentiment was likely limited by news that another round of LNG strike action has been avoided in Australia after workers union Offshore Alliance published a statement confirming that 94% of workers at Chevron’s Gorgon and Wheatstone facilities had voted in favour of an principle agreement to cancel industrial action that was set to begin on Thursday 19th.
Day ahead contracts have opened in much softer territory this morning, with the November 23 front-month contract currently being offered circa 0.3p/kWh below its previous settlement at time of writing.
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