US natural gas prices floundered on Friday after bearish storage data from the Energy Information Administration (EIA) and indications that forecasts of a big freeze in January may have been overdone. Price movements were muted and mixed in other energy and carbon markets, after a generally bullish start to the New Year last week.
The February Henry Hub contract plummeted by 8.4%, from USD 3.66/MMBtu on Thursday to USD 3.35/MMBtu. However, it has recovered sharply in early trading on Monday, up 9% to USD 3.65/MMBtu, an almost total reversal.
In its weekly storage report on Friday, published a day later than usual because of the holidays, the EIA showed a withdrawal of 116 Bcf for the week ending 27 December. Working gas in storage is 3,413 Bcf, down 67 Bcf year-on-year and 154 Bcf above the five-year average of 3,259 Bcf.
This week’s storage report will be published a day earlier than usual, on Wednesday, because Thursday will be a national day of mourning, following the recent death of Former US President James Earl Carter, Jr – better known as Jimmy Carter.
Energy markets based in the US will also be closed, affecting the Henry Hub, JKM and WTI indices in our Pricewatch table.
European natural gas futures fell, following a fortnight of strong growth, with TTF down 0.9%, from USD 15.12/MMBtu to USD 14.99/MMBtu. In local currency, TTF closed back below the psychologically significant EUR 50/MWh threshold.
NBP moved in tandem, down 0.8%, from USD 15.50/MMBtu to USD 15.38/MMBtu.
This easing of European prices is notable, given the recent cessation of Russian pipeline gas supplies through Ukraine. Markets are taking the change in their stride, with prices remaining on a downwards trajectory in trading on Monday morning.
In Asia, the JKM LNG benchmark edged downwards by just 0.1% to USD 14.36/MMBtu. The TTF-JKM spread remains firmly in negative territory, at minus USD 0.63/MMBtu.
Crude oil prices continued their breakout from recent rangebound trading. Brent crude closed up another 0.8%, from USD 75.93/barrel to USD 76.51/barrel, while WTI was up 1.1%, from USD 73.13/barrel to USD 73.96/barrel.
The recent rise in oil prices is being fuelled party by indications from China of further economic stimulus as Beijing struggles to get the world’s second-largest economy back on track. Demand, especially in China and the US, the world’s largest economy, will be a key determinant of price trajectories in coming months.
Another key driver will be interest rates and there are concerns that the tariff policies of President-elect Donald Trump could fuel inflation and delay further interest rate cuts. Trump’s inauguration is now exactly a fortnight away.
European carbon prices continue to surge. The price of EU carbon dioxide emissions allowances was up another 1 % on Friday, from EUR 73.33/tonne to EUR 74.03/tonne.
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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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