European natural gas futures plunged again on Monday, extending the months-long almost straight-line descent evident since October. The fall came despite relatively low levels of wind power and had a strong influence on European carbon prices, which remain at two-year lows with further decline expected.
In Continental Europe, front-month TTF dropped by 4.5%, from USD 7.84/MMBtu on Friday to USD 7.49/MMBtu on Monday.
In local currency terms, the contract closed below EUR 24/MWh for the first time since May 2023, at EUR 23.70/MMBtu, and was oscillating at around that level on Tuesday by lunchtime in London.
In the UK, NBP fell by 4.4%, from USD 7.63/MMBtu on Friday to USD 7.30/MMBtu on Monday. In local currency, the front-month contract closed below 60 p/therm for the first time since May 2023, at 57.93 p/therm, and was oscillating at around that level on Tuesday.
The ongoing decline in UK wholesale gas prices is welcome news for consumers, with regulator Ofgem set to announce the latest price caps on gas and electricity costs later this week. They will apply from April.
It will also be welcomed by the government – given the impact a lower cap will have on inflation – which needs all the positive news it can get ahead of an impending general election, perhaps as soon as May. The expected outcome, certainly among bookmakers, is a landslide victory for the Labour party.
Storage levels in the European Union continue to fall but only slowly, with daily withdrawals minimal because of persistent mild weather. In the UK, storage is on the rise already.
With the vernal equinox now only a month away, Europe will end the heating season with high levels of storage for the time of year, which will make it relatively easy to re-fill in time for winter 2024/25.
Falling prices for natural gas and coal are driving down carbon prices in Europe, with EU emission allowances at their lowest level in more than two years, down 6.4% from EUR 55.34/tonne on Friday to EUR 51.80/tonne on Monday.
The general downward trend in energy prices is not being seen in crude oil markets, with prices remaining robust, partly because of geopolitical concerns in the Middle East.
Brent crude edged up by 0.1%, from USD 83.47/barrel on Friday to USD 83.56/barrel on Monday.
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.
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