Gas prices retrace previous days increases

Gas price retraced at the NBP on Monday, erasing increases made earlier in the session.

The biggest losses were observed at the front end, after a late afternoon sell-off sent curve contracts tumbling, with the new August 24 front-month contract shedding a considerable 2.8p/therm (0.96p/kWh) when compared to its previous close.

High storage levels continue to be the main source of help with gas hubs across the continent reporting they have reached 77.39% full (source: Gas Infrastructure Europe), this is just ahead of last year’s exceptionally high levels [77.20%] and well above the ten-year moving average [62.98%] for that date.

News of a planned increase in Saudi Arabian production may have also fed into the bearish sentiment. State owned operator Saudi Aramco has reportedly awarded development contracts worth somewhere in the region of $25 billion, this includes the expansion of gas production at the Jafurah field, which has reserves estimated to be as high as 229 trillion cubic feet. Saudi Arabia was the world’s 9th largest producer of natural gas in 2023 and the potential increase in global LNG supplies that this latest round of projects could deliver should help Europe as it continues to diversify away from Russia energy sources.

In other news, US District Judge James D Cain Jr. has struck down the Biden Administration’s ban on new LNG export licenses, ruling in favour of the 16 states that had appealed the decision to suspend licences made back in January of this year. The US was the world’s largest LNG producer in 2023 so this ruling could also help to improve supply security over the coming years.

This morning, NBP gas prices have dipped even lower, with the Winter 24 front-season contract currently being offered circa 0.5p/therm (0.017p/kWh) below its previous settlement at time of writing.

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