Pricewatch l 11 June 2024 I Gas Matters Today

US natural gas futures made a brief intra-day foray into $3-plus territory on Monday but fell back below that level later to settle below the previous session’s close. The July Henry Hub contract closed 0.4% down at USD 2.91/MMBtu, ending a rally of three consecutive rises.

The impact of hotter weather later this month is being tempered by expectations that producers who earlier this year curbed output because of low prices will be tempted to open the taps to capitalise on the highest prices since the start of 2024.

Over the past six weeks, US gas prices have climbed by around four-fifths, one consequence of which is that buyers sourcing US LNG under term contracts will be paying substantially more. Most US sales and purchase agreements (SPAs) are linked to the price of Henry Hub gas; tolling contracts mean that buyers take direct gas price risk.

Meanwhile, buyers sourcing LNG under SPAs with Venture Global have welcomed yesterday’s direction from the Federal Energy Regulatory Commission (FERC) that the company should share confidential information relating to its Calcasieu Pass plant in Louisiana, according to a report from Bloomberg.

Venture Global has extended the commissioning period of the plant in a way that buyers regard as unreasonable because they have had to source LNG at higher prices than in their SPAs. The plant started producing as long ago as 2022.

Venture Global has been selling the plant’s output at spot prices, leading to windfall revenues of billions of dollars. The blood of bereft buyers is boiling – and it will be fascinating to see what happens next. The parties have 45 days to agree how information will be shared.

Natural gas futures prices in Europe grew robustly – taking coal prices with them – despite the bounce-back of Norwegian exports. TTF was up 3.7% to USD 10.93/MMBtu and NBP up 3.7% to USD 10.40/MMBtu. API2 coal was up 1.5% to USD 4.38/MMBtu.

In Asia, the JKM LNG benchmark remained at USD 11.97/MMBtu – elevated but surprisingly stable given the recent volatility in Europe. The TTF-JKM spread is now at around a dollar. JKM has been trading in a narrow band of USD 11.83-12.05/MMBtu for close to three weeks.

Crude oil prices surged, taking Brent back into $80-plus territory after a week below that level. The month-ahead contract closed up 2.5% at USD 81.63/barrel. WTI was up 2.9% to USD 77.74/barrel.

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.