Pricewatch | 02 Jul 2021 | Gas Matters Today

European gas and coal prices hit record highs on Thursday, with the bullish prices pushing the European carbon price to an all-time high.

The front-month TTF contract hit a record high of EUR 37.50/MWh during trading on Thursday before settling at EUR 36.14/MWh (USD 12.56/MMBtu). As for NBP, the month-ahead contract hit GBP 91.9/th during the session – a level not seen since November 2005, with the price easing to close at GBP 89.58/th (USD 12.34/MMBtu).

The bull run shows no sign of slowing, with prices rallying amid a tight supply outlook.

Gazprom is set to conduct maintenance on its Yamal and Nord Stream 1 pipelines later this month, with the LNG market looking tight amid robust demand for cargoes in Asia and South America – namely in Brazil where LNG imports hit an all-time monthly high in June due to a severe drought, which has limited hydro power generation.

The rally by the European gas markers has helped push Asian LNG marker JKM higher, with the front-month contract rallying by 0.9% to close at the USD 13.23/MMBtu.

It is not only gas prices in Europe that are hitting record highs. Coal prices on the continent set a new record high on Thursday, with the front-month API2 contract closing at USD 122.30/tonne.

Prices have been rallying amid China’s ban on coal imports from Australia, which has seen the nation draw more cargoes away from the Atlantic basin. Prices have also rallied due to strong gas and power prices in Europe.

The bullish coal and gas prices in Europe have helped push the European carbon price to a fresh record high, with the benchmark December 2021 contract settling at EUR 57.65/tonne.

US gas benchmark Henry Hub made it eight days of gains on Thursday as the marker closed at USD 3.66/MMBtu – its highest close since December 2018. Henry Hub has been rallying on the back of lower production and strong demand, with domestic demand strengthening due to warm weather and pipeline and LNG exports booming.

Crude prices continued to rally on Thursday amid expectations that OPEC and its allies could increase production at a slower pace than previously expected over the coming months.

Brent, which rolled over into the September contract on Thursday, closed 0.9% higher at USD 75.84. As for WTI, it rallied by 2.4% to close in the USD 75/barrel range – its highest close since October 2018.

Front-month futures and indexes at last close with day-on-day changes (click to enlarge):

Time references based on London GMT. Brent, WTI, NBP, TTF and EU CO2 data from ICE. Henry Hub, JKM and API2 data from CME. Prices in USD/MMBtu based on exchange rates at last market close. All monetary values rounded to nearest whole cent/penny. Text and graphic copyright © Gas Strategies, all rights.