Gas prices increase amid low LNG supply

Gas prices continued to advance at the NBP on Wednesday as low LNG supply and threatened Russia-EU flows pressured prices upwards.

The Winter 24 front-season contract observed gains of 1.9p/therm (0.06p/kWh) when compared to its previous close as looming supply fears threatened to further slow injections into storage reserves- which have recently fallen below last years trajectory.

Lacklustre LNG send-out likely served as key source of pressure for contracts at the front-end; data collated from National Gas shows that (within session) LNG flows averaged at a rate of just 8mcm/d on Wednesday, down by around 60% when compared to the same date last year.

At the same time, only 2 laden vessels have berthed at UK terminals so far in June, trailing well behind the 5 vessels that had already arrived in the same period last year as elevated cooling-demand for the fuel in Asia continues to divert cargoes away from Europe.

In other news, today will serve as a key test of the landmark 12th June arbitration ruling in Stockholm. The ruling, which concluded that Russia’s Gazprom Export owed Germany’s Uniper €13 billion in damages due to lost revenue after the Nord Stream pipeline was taken offline (presumably permanently).

Furthermore, it was stipulated that Uniper could legally acquire this sum by seizing payments from other European firms who still have active contracts with Gazprom Export. For many of these firms, payment is reportedly due 20th June, so today will undoubtedly serve as a precedent for how Uniper wishes to go about recovering that massive €13 billion sum. If Uniper opts to seize payments from other firms, the continuation of Russian flows into the EU could be at a risk of coming to a complete stop.

This morning, although NBP contracts had initially resumed their upward trajectory, most are now being offered very much in line with their previous settlement, at time of writing.

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