Energy prices were mainly on a downward trend on Monday as concerns were easing over the likelihood of the war between Israel and Hamas leading to a wider regional conflagration in the Middle East.
This was especially so in Europe, where natural gas front-month futures plunged as downward factors – mild and blustery weather, full storage and plenty of seaborne LNG – overwhelmed any residual upward pressure. Coal prices took their lead from gas, in line with the trend of recent weeks.
In Continental Europe, TTF front-month futures fell by 6.6%, from USD 15.12/MMBtu on Friday to close at USD 14.12/MMBtu on Monday. Prices were trending slightly upwards on Tuesday morning.
In the UK, NBP fell 7.1%, from USD 15.16/MMBtu on Friday to USD 14.08/MMBtu on Monday. It was following a similar trajectory to TTF on Tuesday.
The contribution of wind power to Europe’s electricity supply was down to 26.4% on Monday, according to Wind Europe, as stormy weather gave way to merely blustery conditions.
API2 coal – the benchmark for imports into North-West Europe – was down 3.0%, from USD 4.98/MMBtu on Friday to USD 4.83/MMBtu on Monday.
In Asia, JKM extended its run of minimal price movements, with a drop of 0.7%, from USD 17.57/MMBtu on Friday to USD 17.45/MMBtu on Monday.
Unseasonably warm weather is not just a European phenomenon. In the US, after the recent brief cold spell, rising expectations of a mild November saw Henry Hub dive 7.1%, from USD 3.52/MMBtu on Friday to USD 3.26/MMBtu on Monday. The price continued to fall in early trading on Tuesday, amid signs of rising output.
The Energy Information Administration (EIA) will not be publishing its usual gas storage data this coming Thursday because of a planned upgrade to its computer systems, so two sets of data will be published the following week.
In a gas and LNG projection published on Monday, the EIA said it expects “supply will be sufficient to meet demand in global natural gas markets as we enter the upcoming 2023–24 winter season (November–March)”.
Its view is based on ample gas inventories in the US and Europe, and expanded global export and import capacity for LNG. Risks to this balance include possible extreme weather and supply issues, such as outages at LNG export plants like the one at Freeport LNG in 2022.
Crude oil prices edged up on Monday on confirmation that Saudi Arabia and Russia would continue their self-imposed output curbs until at least the end of the year, but were falling on Tuesday morning as tensions over conflict in the Middle East continued to ease.
Brent closed up 0.3% on Monday, from USD 84.89/barrel on Friday to USD 85.18/barrel, while WTI was up 0.4%, from USD 80.51/barrel to USD 80.82/barrel. Both were down by almost 2% by lunchtime in London, taking WTI below USD 80/barrel.
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.