In a reversal of roles compared with price movements on Tuesday, European natural gas prices edged up only a little on Wednesday, while the JKM marker in Asia jumped up after remaining flat the previous day, widening the TTF-JKM spread.
However, news that industrial action at LNG facilities in Australia may be nearing a resolution saw European prices tumble on Thursday morning before a late morning rally.
The operator of the Gorgon and Wheatstone liquefaction plants, Chevron, announced on Thursday that it had agreed a proposed deal put forward by the Fair Work Commission, Australia’s industrial tribunal. It now remains to be seen what the unions will decide by the set deadline of 09:00 local time on Friday.
If the unions do not agree to the deal, the tribunal could – after a hearing on Friday morning – impose new terms and conditions using what is known as an “intractable bargaining declaration”.
Meanwhile, Norwegian network operator Gassco reported that output from the giant Troll field is finally ramping up, after weeks of disruption caused by maintenance. However, significant uncertainty remains and the market is highly sensitive to any new developments, such as the extension of works on the Norway link to the UK’s St. Fergus natural gas terminal.
In Continental Europe, TTF front-month futures closed up 1.7% on Wednesday, from USD 11.52/MMBtu on Tuesday to USD 11.71/MMBtu. The contract opened significantly lower on Thursday morning but had climbed to well above Wednesday’s close by lunchtime.
In the UK, NBP was up 1.9% on Wednesday, from USD 11.60/MMBtu on Tuesday to USD 11.81/MMBtu.
In Asia, JKM jumped 6.8% on Wednesday, from USD 13.33/MMBtu on Tuesday to USD 14.24/MMBtu. This meant the TTF-JKM spread widened from USD 1.81/MMBtu on Tuesday to USD 2.53/MMBtu on Wednesday, reversing the previous day’s movement.
In the US, Henry Hub fell by 4.0%, from USD 2.85/MMBtu on Tuesday to USD 2.73/MMBtu on Wednesday.
Oil prices fell for the second consecutive day, with Brent down 0.9% from USD 94.34/barrel on Tuesday to USD 93.53/barrel on Wednesday. WTI was down 1.0%, from USD 91.20/barrel to USD 90.28/barrel. The US Federal Reserve on Wednesday left interest rates where they were, in line with market expectations, but cautioned that they would remain high for the foreseeable future, raising concerns over demand.
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.