Monday was a day of drama in global energy markets as key benchmarks – among them Henry Hub natural gas futures and Brent crude oil futures – broke through significant thresholds in unusually high volatility.
US natural gas futures plunged to below USD 2/MMBtu with what now looks like a crushing inevitability, given high production levels, inventories on target to break records by the end of the injection season and as the August Henry Hub contract reached expiry, which often sees prices fall.
The August contract expired at USD 1.91/MMBtu in its fifth consecutive fall and 39% below the peak of USD 3.13/MMBtu reached on 11 June, just seven weeks ago.
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The September contract closed at USD 2.04/MMBtu and remained at around that level on Tuesday morning.
Continuation of trends in the previous session was seen also in crude oil prices. Brent fell below USD 80/barrel, closing down 1.7% at USD 79.78/barrel, for the first time since the first week of June. WTI was down 1.7% to USD 75.81/barrel.
The falls came amid concerns about the Chinese economy, and the likely impact of weak economic data on oil demand in the second half of 2024, and despite rising tensions in the Middle East.
The world is waiting to see how Israel will respond to the rocket attack last Saturday that killed 12 young people in the occupied Golan heights. Israel has blamed Iran-backed Hezbollah in southern Lebanon, a view backed by the US, and is considering how to retaliate.
World leaders have urged restraint and the UK has joined other European countries in urging its citizens to leave Lebanon and to avoid travelling there.
European natural gas prices continued their climb, with month-ahead TTF surging by 3.9%, to USD 10.74/MMBtu, the highest close in a month. The August futures contract expires today. The weather in Europe is hotting up, boosting demand for air conditioning.
In the UK, August NBP, which also expires today, was up 4.6% to USD 10.25/MMBtu.
In Asia, the JKM LNG benchmark jumped by 2.0%, from USD 12.21/MMBtu to USD 12.45/MMBtu, the highest close since the first week of July, amid unconfirmed reports that the Ichthys LNG export project in Australia has seen an outage on one of its liquefaction trains.
The faster rise in TTF meant that the TTF-JKM spread fell by 9% from USD 1.87/MMBtu on Friday to USD 1.70/MMBtu yesterday.
European coal prices surged, with API2 up 8.6% to USD 4.61/MMBtu, ending a run of stability that has lasted for several weeks.
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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