European natural gas futures rallied yesterday after a bearish start to the trading session on the back of reports suggesting that a major LNG export plant in the US may be experiencing a shutdown.
Concerns were raised by reports that both gas and electricity supplies to Freeport LNG – the-second largest LNG producer in the US – had dropped sharply. The fall in electricity supply matters because, unusually, Freeport uses electric drives as prime movers for its compressors rather than gas turbines.
The 15 mtpa Freeport LNG plant experienced an eight-month shutdown after an explosion in June 2022, contributing significantly to market tightness during a period of unprecedented price peaks.
The initial boost to European prices soon faded, however, with mild weather, bulging storage facilities and weak demand continuing to exert downward pressures.
Other bearish factors include the re-start of the Tamar gas field offshore Israel, high seaborne LNG volumes and the impact of Storm Debi on wind power, which contributed 24.4% of Europe’s electricity on Monday, according to Wind Europe.
In Continental Europe, TTF front-month futures closed up 2.8% on Monday, from USD 14.60/MMBtu on Friday to USD 15.01/MMBtu. The price was on a downward, if volatile, trend on Tuesday morning.
In the UK, NBP was up 2.0%, from USD 14.40/MMBtu on Friday to USD 14.68/MMBtu on Monday, and was moving in tandem with TTF on Tuesday morning.
In Asia, JKM reversed its gentle decline, edging up by 0.1%, from USD 17.19/MMBtu on Friday to USD 17.20/MMBtu on Monday.
On expectations of colder weather in the second half of November, Henry Hub in the US climbed 5.5%, from USD 3.03/MMBtu on Friday to close at USD 3.20/MMBtu on Monday.
Crude oil prices rallied for a third day as OPEC published its latest monthly report, saying market fundamentals remained strong “despite exaggerated negative sentiment”.
Brent was up 1.3%, from USD 81.43/barrel on Friday to USD 82.52/barrel on Monday. WTI was up 1.4% from USD 77.17/barrel to USD 78.26/barrel. Both Brent and WTI were up again on Tuesday morning, by around 0.5%.
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.