Soaring geopolitical tensions increase prices to yearly highs

The bulls reclaimed control of the NBP on Monday, with soaring demand and geopolitical tensions combining to increase gas prices.

The biggest gains were posted across the near-curve, with both the front-month and front season contracts being pushed to year-to-date heights after each climbed more than 2.1p/therm (0.07p/kWh) when compared to their previous close.

Freezing temperatures and increased heating demand was the likely reason for the rises with data from National Gas showing that system demand rose by around 10% (37mcm) when compared to Friday.

Furthermore, our 14 day model maintains that a tight supply and demand outlook is to be expected over the rest of November, with demand set to average well above seasonal norms until at least 2nd December.

At the same time, a strong uptick in LNG supplies may have served as a price ceiling for many contracts. According to the latest shipping signals, as many as nine laden vessels could arrive at British terminals over the next two weeks.

Already we have seen a sharp increase in LNG send out volumes as operators rush to free up storage in anticipation of the new cargoes, with data from National Gas showing that within session flows rose to an average of 76mcm, up from just 34mcm on Friday. Of the nine vessels, six originate from the United States, highlighting its continued dominance in the share of regional LNG exports.

In other news, Russian flows continue to reach Austria despite Gazprom’s threats to suspend exports from Saturday morning. It is thought that Gazprom has opted to divert flows to spot markets/neighbouring countries and the volume of gas transiting via Ukraine is so far unchanged.

This morning, the majority of contracts are being offered in line with their previous settlements at time of writing.

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Price commentary courtesy of Crown Gas and Power