Fears over the fate of the US economy and the implications for oil demand continue to weigh on crude oil prices, despite the shutdown of production in Libya because of a dispute between the country’s two rival governments.
Month-ahead Brent futures fell by 1.1%, from USD 79.55/barrel on Tuesday to USD 78.65/barrel on Wednesday, before appearing to stabilise in early trading on Thursday but later back on a downward trend. WTI was down 1.3%, from USD 75.53/barrel to USD 74.52/barrel.
Yesterday’s weekly petroleum status report from the Energy Information Administration (EIA) showed a 0.8 million barrel decrease in commercial crude oil inventories in the week ending 23 August. Inventories are now 4% below the five-year average for this time of year, at 425 million barrels.
Price movements in natural gas markets were relatively muted in a respite from recent volatility.
In continental Europe, the September TTF contract ended its run of three consecutive rises with a fall of 1.0%, from USD 12.68/MMBtu to USD 12.55/MMBtu. It was back on a gentle upwards trajectory early on Thursday morning, ahead of its expiration later today, but later turned downwards.
In the UK, NBP followed suit, down 1.0%, from USD 12.36/MMBtu to USD 12.24/MMBtu.
Despite the falls, European gas prices remain elevated, with several bullish factors exerting upward pressure.
These include lower exports from Norway because of maintenance at gas facilities, fears over the fate of Russian supplies transiting Ukraine, and heightened geopolitical risk in the Middle East after Israel alarmed world leaders with what it called a "counter-terrorism operation" in the occupied West Bank on Wednesday.
UN Secretary General António Guterres described the development as "deeply concerning", while the EU is considering imposing sanctions on some Israeli ministers.
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In Asia, the JKM LNG benchmark edged upwards by 0.1% to USD 14.07/MMBtu. That rise, along with the fall in TTF, widened the TTF-JKM spread to USD 1.51/MMBtu.
In the US, the September Henry Hub contract fell at one point to a low of USD 1.86/MMBtu on Wednesday before closing up 1.4% at USD 1.93/MMBtu as the contract expired. The October contract, now the front month, closed at USD 2.10/MMBtu. EIA weekly storage data is due out later today.
There are reports that the Freeport LNG export plant in the US has shut down after a fire suppression safety system went off during routine maintenance. No fire was discovered so work is under way to re-start the plant.
European coal prices moved in the opposite direction to natural gas, with API2 up 0.6% to USD 4.87/MMBtu.
API2 has been trading within a narrow band of USD 4.77-4.91/MMBtu since the start of August, after spending weeks closer to USD 4/MMBtu. A key driver has been the elevated level of gas prices.
European carbon prices continue to oscillate around USD 70/MMBtu. EU carbon dioxide emissions allowances were down 1.0% to USD 70.17/MMBtu on Wednesday.
The highest closing price in August has been USD 72.44/MMBtu, while the lowest has been USD 67.86/MMBtu.
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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