Bullish carbon futures and tight supply drives gas price up

Bullish carbon futures combined with tight supplies to drive up gas prices on Thursday.

Key contracts were propelled to their highest level since 22nd April, with a bleak LNG outlook and curtailed Norwegian output likely eroding confidence in Europe’s ability to quickly replenish storage.

On the LNG front, shipments to the UK have been sparse for several weeks now, with shipping signals suggesting that only 5 vessels have berthed at terminals since 13th April and none are scheduled to arrive over the next 7 days. According to data from National Gas, LNG send out averaged just 25mcm/d throughout Thursdays session, which was only a fraction of the 92mcm/d figure recorded for the same day last year.

Subdued Norwegian output also increased pressure with extensive planned maintenance across the NCS (Norwegian Continental Shelf) keeping pipeline exports into Great Britain’s’ Easington terminal below 30mcm/d since April 24th, hampering efforts to reinforce the UK’s relatively low storage levels (data from offshore operator Gassco).

Surging carbon futures increased prices further out, data from ICE shows that the Carbon EUA benchmark contract rocketed almost 7% day-on-day (the second biggest daily increase observed so far this year).

In other news, Feedgas flows at the Texas Freeport LNG plant remain severely limited, although the operator had intended to boost output by 10% across the month of May, this now appears unlikely as only 1 of the facilities 3 liquefaction trains has been brought back online at time of writing.

Gas prices have opened very much in line this morning, with the Winter 24 front-season contract currently being offered just circa 0.02p/kWh higher when compared to its previous settlement.

The UK is currently consuming 31.84 GW’s of electricity (09:30 – 10:00).

The UK’s onshore and offshore wind turbines are currently generating 7.75 GW’s (22.63%) of the UK’s total electricity with gas for power now generating only 8.23 GW’s (24.03%) of the total. Fortunately the above average temperatures is keeping overall demand lower which might help put a cap on potential increases.

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