Wholesale prices up as Asia starts outbidding Europe for Gas Imports
Gas prices were up again at the NBP on Monday amid a combination of surging demand in East Asia and renewed US tropical cyclone risks.
The biggest moves were once again concentrated at the front-end, with the September 24 contract posting gains of circa 3.6p/therm (0.12p/kWh) perhaps due in part to the competitiveness of the EAX LNG benchmark when compared to its European counterpart.
Reports of extreme heat in Japan (one of the world’s largest LNG importers) could mean power operators in the region are willing to outbid the European market, pulling even more spot cargoes away from the region.
Furthermore, a developing ‘weather disturbance’ in the tropical Atlantic could spell even more disruption for the global supply and demand dynamic. The US National Hurricane Centre said on Monday morning (EDT) that there was a 50% chance that a cyclone could develop over the next 7 day outlook. While none of the US’s export terminals lie within the projected path, US offshore oil and gas assets could still be affected as we saw earlier this month following the landfall of Hurricane Beryl.
In other news, fears of a serious escalation in the Middle East are topping headlines this morning. Ministers from the Israeli Government have reportedly authorised retaliatory action against Lebanon based political party and militant group Hezbollah. This comes in response to a missile attack over the weekend that resulted in the deaths of 12 people in the Israel controlled Golan Heights region. Hezbollah was proscribed as a terrorist organisation by the UK Government in 2019.
Natural gas prices are relatively unchanged this morning, with the Winter 24 front-season contract currently being offered just 0.5p/therm (0.017p/kWh) below its previous settlement, although many contracts have yet to trade at time of writing.
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Price commentary courtesy of Crown Gas and Power 