After all the build-up, and numerous rumours that some fudge might be cooked up in the dying days of 2024, supplies of Russia pipeline gas to Europe, via Ukraine, have ceased as expected with the expiry of the governing transit contract at the start of 2025.
Ukraine’s President Volodymyr Zelensky – determined that revenues from gas transit through his country would no longer contribute to the rain of terror that Russian President Vladimir Putin has visited on Ukraine – described the end of flows as a major defeat for Russia.
Natural gas prices responded accordingly, given that no one really believed a solution would be possible in the time available, especially in the geopolitical context of the Russia/Ukraine war, which has been going on for almost three years. Prices reached their highest levels of 2024 – but not by much.
There were two other events of significance over the period between the last edition of Pricewatch on the Friday before Christmas and today’s.
One was the winter solstice on the 21st, which marked the start of astronomical winter in the northern hemisphere, foreshadowing an increasing likelihood of colder weather ahead. The other was the expiry of the January contracts for TTF and NBP futures towards the end of last month.
The February TTF contract, now the front month, closed at USD 14.83/MMBtu (EUR 48.89/MMBtu) on New Year’s Eve, up 2.1% from USD 14.53/MMBtu the previous day. In the UK, NBP rose by 1.6%, from USD 15.02/MMBtu to USD 15.26/MMBtu.
In local currency, TTF closed at its highest level for 2024 but only a whisker above where the month-ahead price was at the start of December. The February contract opened above EUR 50/MWh on Thursday morning before retreating.
European markets were closed yesterday for the New Year public holiday.
In Asia, JKM LNG prices are above where they were a fortnight ago but have since stabilised. The price was up 0.6% on New Year’s Eve to USD 14.24/MMBtu. The TTF-JKM spread stands at minus USD 0.59/MMBtu.
US natural gas prices soared over the Christmas festivities to almost USD 4/MMBtu but then lost ground. Henry Hub was down 7.7% on New Year’s Eve to USD 3.63/MMBtu, from USD 3.94/MMBtu.
Crude oil prices ended the year rangebound, as they have been for weeks – pulled and pushed by numerous factors that have tended to cancel each other out. But that might be about to change, with US President-elect Donald Trump to be inaugurated on the 20 January.
The March 2025 Brent futures contract closed at USD 74.64/barrel on New Year’s Eve, up 0.3% from USD 74.39/MMBtu, its third consecutive climb. WTI was up 1.0%, from USD 70.99/barrel to USD 71.72/barrel.
The price traded significantly above USD 75/barrel in early trading on Thursday, which, if maintained, would lead to the highest month-ahead close in months. As with gas, the market was closed yesterday.
At the time of writing, Brent was at USD 75.72/barrel – well above the range of recent weeks.
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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.
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