Pricewatch l 13 May 2024 I Gas Matters Today

US natural gas futures lost ground on Friday but ended the week 40% up on the price a fortnight ago – with bullish factors including declining output, higher flows to LNG export plants and the influence of weather  on domestic demand.

The front-month contract fell by 2.1%, from its highest month-ahead close since January of USD 2.30/MMBtu in the previous session to settle at USD 2.25/MMBtu. The decline came amid increasing concerns of construction delays at Golden Pass LNG, the QatarEnergy/ExxonMobil project in Texas, which could now miss its target start-up date in the first half of next year.

European natural gas futures declined, as falling carbon prices increased the attraction of coal in power generation in continental Europe. The June TTF contract was down 2.8%, from USD 9.73/MMBtu on Thursday to USD 9.46/MMBtu on Friday.

In the UK, where coal’s contribution to electricity generation is negligible, NBP fell by 3.5%, from USD 9.45/MMBtu to USD 9.12/MMBtu, because of its close linkage to TTF. According to National Grid, the system operator, coal contributed just 0.9% of the UK’s electricity in April.

Both prices remained volatile early on Monday morning but without a clear underlying direction up or down.

In Asia, the JKM LNG price edged up 0.1% to USD 10.48/MMBtu, with the ongoing heat wave in South-East Asia boosting air conditioning load and hence demand for LNG. The TTF-JKM spread has risen to just over a dollar per MMBtu.

Crude oil price futures were down on Friday, with the Brent July contract settling down 1.3% to USD 82.79/barrel, its lowest close since the middle of March, having been briefly above USD 90/barrel in the intervening weeks. WTI also fell by 1.3%, from USD 79.26/barrel to USD 78.26/barrel. Prices were up by around 0.3% on Monday morning.

Friday’s decline came despite international uncertainty over whether Israel has actually begun its ground offensive into the city of Rafah in southern Gaza. More than seven months on since the start of the Israel-Hamas war, markets appear to be taking comfort from the fact that conflict in the Middle East has yet to result in any significant curtailment to oil supply.

That said, the appalling humanitarian situation in Gaza is causing increasing international alarm. Egypt – which has been playing a key role in brokering ceasefire negotiations between Israel and Hamas – has announced it is formally supporting South Africa’s allegations of genocide against Israel at the International Court of Justice.

European coal prices fell, but by less than gas and carbon prices. API2 futures were down 0.8%, from USD 4.31/MMBtu on Thursday to USD 4.28/MMBtu on Friday.

European carbon prices retreated from recent highs, with EU emissions allowances down 1.8%, from EUR 71.51/tonne on Thursday to EUR 70.19/tonne on Friday. Thursday’s closing price was the highest since early January.

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.