Crude oil prices jumped sharply on Monday, defying near-term fundamentals, as exuberance in global equity markets spilled over into the energy sector.
In the US, the S&P 500 stock market index reached its 30th high so far in 2024 and the August Brent crude contract jumped to over USD 84.50/barrel before settling 2.0% up at USD 84.25/barrel. WTI was up 2.4% to USD 80.33/barrel.
Both prices were edging downwards on Tuesday, falling by around a quarter of a percentage point by late morning in London.
In Asia, spot purchases of LNG are looking more expensive after a rise in the month-ahead JKM price following the expiry of the July contract. August is now the front month. It is not unusual for the month-ahead JKM price to move sharply as contracts expire and this time around is no exception.
The August contract settled at USD 12.58/MMBtu on Monday, a fall of 1.5% on the previous session. However, this price is 3.6% higher than the price of the July contract at expiry on Friday, USD 12.14/MMBtu. Higher prices appear to be on the way. The November contract is above USD 13/MMBtu and the January 2025 contract above USD 14/MMBtu.
European gas prices fell for a second consecutive session, with July TTF down 3.9% to USD 10.77/MMBtu. The fall marks the continuation of a sawtooth pattern which has lasted for almost a month, with TTF trading within a band of USD 10.54-11.42/MMBtu.
In the UK, the July NBP contract has been following a similar trajectory, closing at USD 10.28/MMBtu yesterday. It has been trading within a band of USD 10.11-11.09/MMBtu.
US natural gas futures fell for the fourth consecutive session, with the July Henry Hub contract down another 3.2%, from USD 2.88/MMBtu on Friday to USD 2.79/MMBtu on Monday. The price is now down 11% from the high of USD 3.13/MMBtu reached early last week.
The main factors influencing sentiment are higher output in the Lower 48 states and a downgrade in forecasts of hot weather for later in the month.
European coal prices moved down with gas prices but the fall was muted. API2 was down 0.5%, from USD 4.38/MMBtu on Friday to USD 4.36/MMBtu on Monday.
European carbon prices fell again to their lowest close since April, with EU emissions allowances down 0.4% to EUR 66.59/tonne, having peaked at EUR 74.66/tonne in May.
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.
Got a question or comment about this story or other energy matters? Drop our editor, Penny Sukhraj, a line [email protected]
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