Market Comments January
Thursday 2nd January 2020 - The last day of the year brought another decline in prices. Russia and Ukraine finalising the transit deal and warm weather are pressuring the front of the curve. Day-ahead has dropped below 30 p/th. The broader energy complex continues to move lower apart from Brent. This morning, prices bounce of the lows even though the system is 35 mcm long. We expect to see warm weather for at least the next seven days, which should keep a lid on the prompt prices.
Friday 3rd January 2020 - Gas prices started the new year with a little bounce in the morning. But during the day it fell back down and closed unchanged to marginally down. The supply situation is unchanged, i.e. well supplied, and temperatures and wind still look bearish. Also, LNG looks set to continue to deliver high. During the night the US have killed an Iranian general and have therefore lifted geopolitical risks significantly. This is most obvious in the oil that is up +2$/bbl This lifts the European Gas Markets by more than 1p/th(-0.40 €/MWh) across the board. The rise has to be seen in the context of a massive sell off during Christmas days. Fundamentally nothing has changed, and gas is still well supplied, so the only question is how large the effect of a raised geopolitical risk shall be.
Monday 6th January 2020 - Gas prices rebounded on Friday after hitting multi year lows on a persistent oversupply and a failure of winter to show itself in 2019 or thus far in 2020. The rebound was triggered not by the fall in supplies to the European market from Russia, that took place at the start of the new year (despite a transit agreement in principal) but from a rally in oil prices triggered by US actions in the Middle East. The increase in oil to almost $70/bbl increased Asian oil linked LNG prices and spooked the markets. This morning, despite a long system, the market continues to make some gains with oil and coal, however, mild weather in the forecasts and loads of gas in storage mean that price gains should remain limited.
Tuesday 7th January 2020 - Yesterday market rally pushed gas prices to a new intra-day high of trading before a turn in sentiment cut short the bull's party. By the late afternoon prices returned to their levels from the previous close and then collapsed into the close of trading, erasing the gains made on Friday after the military strike and killing of an Iranian General. Brent crude remained elevated, but gas plunged taking power, coal and carbon down with it. This morning, the system is long, flows from all sources are stable and high, with the exception of Russian volumes which have yet to recover, and remain unneeded by the market, gas prices are down in early trade action.
Wednesday 8th January 2020 - Gas prices closed down yesterday, retracing gains from last week on a drop in oil, while coal and carbon managed to stay in positive territory. This morning, the system is marginally short, prompting modest gains in spot prices while the curve is mostly unchanged day on day. Weather forecasts show a slight cooling trend near the end of the 15-day outlook, however the drop in temperatures is only to slightly below normal. Iranian missile attacks on a US base in Iraq, API reported stock draws in US crude, and the crash of a Ukrainian Airlines flight to Iran cause a spike in oil prices early morning to over $71/bbl, prices have dropped $2 from the highs but remain elevated day on day. Russian flows to the EU are beginning to recover which would be bearish for an already well supplied and stocked market
Thursday 9th January 2020 - Gas contracts held their value yesterday closing broadly unchanged day on day after testing both the upside and downside throughout the session. Soothing words from leaders in both Iran and the US clamed markets and a surprise 1million barrel build last week in US stock piles sank oil prices reversing the gains made int he commodity after the US military airstrike and Iranian retaliation. This morning the system is slightly short on a minor supply disruption in Norway, flows from Russia continue to return. Despite the supply shortfall, prices are down slightly testing technical support levels as the bears continue to try and push prices lower.
Friday 10th January 2020 - The system opened short yesterday and remained so throughout the session lifting spot prices and supporting the forward curve. Some weather models are showing the minor possibility of a drop below normal near the back of the 15-day outlook, which has likely prompted some short covering into the weekend. This morning, the system is again short, and the market will have an opportunity to take some volumes from storage to relieve some of the supply overhang. Oil is down while, coal power and carbon are all up along with gas which has made some modest gains.
Monday 13th January 2020 - Gas prices slumped on Friday taking minor losses in the UK, despite a tight supply/demand balance that persisted throughout the trading session. The bulls could not muster enough support to hold on to their early morning gains and soft oil prices along with weaker power and carbon sank gas. This morning, the system is short, despite an increase in supplies, flows into Europe are mostly unchanged while the weather outlook is confirming a cool down towards normal or slightly below normal temperatures. Gas prices are up modestly in early trade action along with coal and oil, power and carbon prices are more mixed.
Tuesday 14th January 2020 - Gas prices made a modest recovery yesterday, sustaining gains into the close on the back of a short system and a cooler weather forecast, price action was driven by the spot which made the greatest gains. The broader energy complex was mixed with coal making gains while oil sank, and carbon was neutral, power prices were mixed. This morning, the system is again short, however, forecasts have come in warmer, carbon and power are down while oil and coal are mostly flat. Gas is trading lower from the open despite the shortfall in supplies as the bearish mood in the market is proving difficult to overcome.
Wednesday 15th January 2020 - Gas contracts took a drubbing yesterday, falling sharply from the spot and balance of winter, out to the long end of the curve. Coal and carbon were also down with gas adding bearishness to the power market feeding into a virtuous cycle of selling. This morning, the system is balanced, flows are stable and weather forecasts have shifted to warmer outlooks. Oil, and coal are down slightly in early trade action, by contrast German power and carbon are slightly positive and gas is mostly flat, save for spot prices which are dealing lower. Temperatures are expected to moderate closer to normal and wind output is expected to fall which could provide at least a temporary bottom to prices.
Thursday 16th January 2020 - Yesterday gas prices took a pause, trading mostly sideways throughout the day and only closing slightly down. Wild fluctuations in oil and carbon did not inspire massive selling or buying in gas, and a forecasted cool down in temperatures fell on deaf ears. This morning, weather forecasts have come in a touch warmer, particularly in the last 5 days of the 15-Day outlook, flows are mostly unchanged, save for the UK where off shore production has pulled back leaving the system under supplied by around 20mcm. Oil and carbon are up today, in early trading action, along with power while gas is sideways testing both the up and downside.
Friday 17th January 2020 - Gas contracts traded lower on Thursday, following losses in coal as both fuels compete for the last outlet for demand, the power sector. Warm weather remains in the forecasts with only a brief dip into sub seasonal temperatures over this weekend. This morning, the UK supply/demand balance has swung negative into a deficit, an increase in consumption coupled with a reduction in inflows has tipped the balance, despite the system being short many times this week spot demand has not been able to support prices on the back of the massive storage overhang. Spot prices are flat this morning, with curve contracts trading slightly lower, power and carbon are down while coal and oil are slightly up.
Monday 20th January 2020 - Gas prices tracked lower on Friday, capping off a week of losses for the fuel as winter remains on hold for this year and robust wind and hydro power blunt power sector demand. In addition to weakness for gas, coal took a beating and power prices tracked both feedstocks lower, only oil and carbon contracts were able to make gains. This morning, the system is balanced, weather forecasts have gone warmer in the back -end of the 15-day outlook and flows to the UK from Norway have increased. Along with stubbornly high stock levels gas prices are again under pressure dealing slightly down from the previous close.
Tuesday 21st January 2020 - Gas prices edged lower yesterday, helped by mild weather and a weak energy complex that featured softening coal, power and carbon prices, oil maintained its value on the back of supply disruptions in Libya and Iraq. This morning, the system is short on supply reductions from both Norway and the UK offshore production region, weather forecasts show no sign of below normal temperatures in the 15-day outlook and wind, though currently low is expected to pick up to maximum production levels over the weekend. Markets are taking a break from the sell-off this morning, trading sideways in gas, coal, oil, power and carbon.
Wednesday 22nd January 2020 - Gas prices took their chance to move up yesterday on the back of a persistently short system that lasted throughout the trading session, coal followed gas given some additional bullish sentiment despite weakening carbon and oil. This morning, the system is close to balance at the opening of trading, demand has fallen and flows from Norway are up along with LNG send-outs. Gas is trading tight to the previously close, oil and coal are down while carbon is up which is making power prices mixed. Pressure remains on both gas and power with very mild conditions and forecasts for maximum wind output later this week and into next.
Thursday 23rd January 2020 - Gas prices fell further hitting fresh lows yesterday late in the session after spending mostly of the day trading around the previous close. Falling oil turned sentiment more bearish in the afternoon as global concerns over a possible coronavirus pandemic has the potential to cut demand for oil with a decline in travel. This morning, the system is short and will likely find balance from stock withdrawals as both Norwegian and LNG flows are up and demand continues to outpace supply. From Sunday, a massive increase in wind power output is expected at near capacity which will put pressure on both spot power and gas prices. Power, carbon and coal are up in early action while oil is down, and gas is broadly unchanged.
Friday 24th January 2020 - Gas prices were dealt lower yesterday, across the forward curves while spot prices were unmoved, oil and carbon were also down with only coal making day on day gains. Flows from Norway, Russia and LNG send-outs are all higher while demand has dropped off. This morning, the system is short, as supplies have contracted further than demand leaving a minor deficit. Coal and carbon are dealing lower, while oil and German power are up slightly, gas is following. After weeks of trading lower profit taking ahead of the weekend is a distinct possibility, despite warmer and windier weather expected for next week.
Monday 27th January 2020 - Gas prices closed on Friday, little changed, despite a further drop in oil, lower carbon prices made coal more competitive providing some modest lift to its prices giving gas some space to rise. This morning, the system is short as demand increases have not been met by gas supplies, support for spot prices is to be expected. Oil has dropped sharply again and is close to entering a bear market. The fall has been triggered by concerns that China's quarantines and global travel warnings will further sap demand for crude. Weather forecasts are showing some minor hints of below normal seasonal temperatures at the back end of the 15-day outlook. Gas prices are up slightly in early trade action supported by both weather and the short system, power and carbon are mostly flat while coal and oil are down.
Tuesday 28th January 2020 - Gas markets trade lower, higher and ended the day mostly unchanged, after being whipsawed by concerns of a global economic slowdown driven by the coronavirus, juxtaposed with local price drivers like cooler temperatures and a spate of perennially short days for the UK system. This morning, the system is again short, despite a global gas glut, as market participants carefully manage supply and demand, as the latter is expected to drop on mild weather and strong wind power output. Equity markets are down in Asia and expected to open lower in Europe, the broader commodities complex is lower with metals and oil down. The picture is mixed in Europe with gas slightly up alongside German and UK power while carbon and Nordic power are down.
Wednesday 29th January 2020 - Gas prices got a lift yesterday from a short system and increased spot prices, additionally, short covering and rolling contracts contributed to the rise in prices. Coal and power followed gas to the upside while carbon prices remained neutral. This morning, the system is much closer to balanced even with falling supplies and reduced LNG send-outs. Carbon and power prices are down as the warmer weather begins to take hold and wind output nears maximum capacity. Storages remain painfully full for this time of year, with German stocks at almost 90% of capacity, a new record. Gas prices are coming off in early trade action along with the broader European energy complex.
Thursday 30th January 2020 - Gas prices were pummelled on the spot yesterday, sending contracts tumbling across the curve, reversing all and more of the previous day's gains. The sell-off in gas pushed prices to new lows, dragging much of the European energy complex down alongside them. Coal and carbon were dealt lower sending power contracts into a freefall as weather forecasts were revised warmer, compounding the bearishness. This morning, gas prices remain under pressure in both the UK and on the continent, weak coal and softer carbon prices are pressuring power creating a virtuous cycle of bearishness and selling. Weather forecasts have been revised warmer and the full brunt of warm winding weather is beginning to land compounding the downward pressure.
Friday 31st January 2020 - Gas prices in the UK came under further pressure on the spot as temperatures climb and with wind power output. A drop of almost 2p/th had a cascading effect across all UK gas contracts pressuring the rest of the curve, falling prices for oil, coal, power and carbon were also noted adding to negative price sentiment. This morning, the system is actually long, after weeks of shortfalls on plunging demand. Weather forecasts have been revised even warmer for the UK and NW Europe overnight with the chance of winter weather seen diminishing further. Prices on the NBP are offered down from yesterday's close, traders will begin to focus further on US gas prices for indications of a possible price floor to the downside.
Market Comments February
Monday 3rd February 2020 - Gas prices closed out the last week down from the previous as traders continue to search for the bottom, amid faltering demand and a deluge in supplies. Oil and power were dealt lower on Friday adding to the bearish sentiment on gas. This morning, the system is balanced as demand picks up slightly but remains matched with supply. Weather forecasts remain consistently above the seasonal normal and wind output continues to be robust. Storage stocks remain well above the historical highs and will continue to add pressure to prices. Gas contracts are down slightly at the open, news from Chinese markets is a 10% drop in equities and forecasts for a 20% drop in oil demand, other commodities have tumbled as well, copper, iron ore, etc.
Tuesday 4th February 2020 - Gas prices fell further on Monday, gas joined other commodities, oil, coal and power, and global equities in the sell-off driven by a massive write down in Chinese equities. Regional fundamentals are not helping either, mild, windy weather, strong flows and high stocks are continuing to pressure values. This morning, the system is 10mcm long, weather forecasts have been revised a bit warmer and expectations for wind power are maximum capacity output over the 15-day period. Gas weakness is offset by a minor rebound in coal and oil, power prices are sideways, and carbon is slightly higher.
Wednesday 5th February 2020 - UK prices have seen a mixed bag upon open, with near curve prices easing slightly, whilst further across the curve, prices have lifted. Temperatures are set to remain below seasonal until Friday, before warmer and windier weather approaches. The near curve has been pressured by increased LNG flows into the grid and the UK holding a balanced system however further out on the curve prices have increased with gains in Oil, Coal and Carbon supporting the gains. OPEC are set to continue talks today into a possible 500,000 barrel/day production cut to offset the demand lost by the slowing of Chinese economy following the Chinese New Year and Corona virus outbreak
Thursday 6th February 2020 - Gas prices were mostly unchanged after yesterday's session, save for longer dated contracts, winter2020 and onward which got a lift from rising oil and coal prices. This morning the system is long as supplies recover, increases in Norwegian, Russian and Dutch gas are all noted, and warmer, windier conditions take hold. Weather forecasts for the 15-day outlook remain above to well above seasonal normal as winter conditions remain at bay. The commodity picture is mixed in early trade action as oil continues to recover from its recent slide while coal and German power are down, and carbon and gas are sideways
Friday 7th February 2020 - Gas price came under pressure yesterday trading to fresh lows around the midday, however, by early afternoon the bulls manages to stem most of the losses and push prices back up near the previous close. Broader markets remained depressed with oil, coal, power and carbon all dealing lower. This morning, the system is oversupplied as demand drops on increased wind power output and warmer temperatures. Across the energy markets commodities are trading sideways, coal and oil are mostly unchanged along with carbon and power. Gas prices are flat in early action, save for spot prices which are dealing lower because of the bearish fundamentals.
Monday 10th February 2020 - Gas price action was mixed on Friday, with weakness on the spot and through the balance of winter, while longer dated contracts found willing buyers to support and lift the market. High winds, coming from an Atlantic storm blasted Europe generating maximum power from wind farms, curtailing gas fired power generation on Friday and over the weekend. The broader commodity complex was also down with oil, coal and carbon dealing lower with power prices mixed by region and tenor. This morning, gas is trading slightly lower in early action, with lower coal, power and carbon, mild windy weather is expected for the next 15-days which will keep up the bearish pressure.
Tuesday 11th February 2020 - Gas price plunged yesterday, weighed down by falling coal and oil prices. Demand for gas was also weaker as renewables pushed gas out of the usual demand from the power sector and temperatures were mild. This morning, the market is mostly unchanged, oil rebounded from yesterday's lows but a growing glut in crude and products is likely as slowing demand related to the coronavirus weighs on commodity markets. The system is +20mcm short at the open as nominations from LNG terminals in the UK have been reduced for the day on falling prices, the arrival of almost 15 vessels before the end of the month means the likelihood of increases in send outs is high.
Wednesday 12th February 2020 - Today, the system is balanced as temperatures beginning to climb, send outs from Norway increase and wind output surges. Gas prices are slightly up in early trading following on gains in oil and stock markets as fear of the coronavirus ebbs after it appears cases of infection have plateaued. Volumes are expected to remain low throughout the week with many traders out of office for the E-World conference in Essen Germany.
Thursday 13th February 2020 - Gas prices rebounded on Wednesday, lifted by the broader commodity complex, including oil and coal, with strength focused mostly on the longer dated contracts. Gains on the spot and balance of winter contracts was marginal due to continued mild windy conditions and robust flows and high stock levels. This morning, the system is slightly short, weather forecasts are a touch warmer and flows remain unchanged. Coal, and oil are down modestly, along with power and carbon. Gas prices are mostly unchanged at the open, down slightly in the UK and mostly flat on the continent. Concerns of a rise in coronavirus cases has hit equity markets in Asia and may cast a shadow over equities and commodities today in Europe.
Friday 14th February 2020 - UK Gas prices were mostly unchanged yesterday, save for the longer dated contracts which moved higher on thin volumes and gains in oil and coal, a stronger pound also kept downward pressure on the commodity. By contrast, prices on the continent were supported by a weaker euro in addition to the broader commodity complex. This morning, the system is slightly short, coal and oil are up a touch while power and carbon are slightly lower. Gas is broadly unchanged in early trade action, weather forecasts remain mostly unchanged save for the last few days of the 15-day outlook which return to seasonal normal. LNG deliveries are forecasted to increase as China pulls back on imports do to slowing demand related to the coronavirus
Monday 17th February 2020 - Prices have opened with small gains in comparison to Friday’s session, with prices lifting across the curve. The UK system is short, holding a deficit of 22mcm despite total demand sitting well below seasonal norm. The total demand for the UK is set at 263mcm today, 49mcm below seasonal average, helped by strong wind generation and mild temperatures. UK wind generation is set to lift above 10GW for today, which has helped to pressure prices intraday after a stronger open. Further out on the curve, contracts have been lifted by gains in the Oil market, with the largest weekly gain since September impacting prices. The Oil price climbed to $57.35 following the postponement of OPEC+ meeting to March, as it remains uncertain if Russia will agree to further cuts. News from the weekend, also appeared to suggest that the Coronavirus may have peaked with transmission, threatening to lift Asian demand once more. Temperatures are set to remain above seasonal average for the coming week, helping to push gas prices at the front down. Any cold spells are set to be to seasonal average and short lived ensuring weather forecasts remain bearish
Tuesday 18th February 2020 - Power prices in the UK were dragged up with gas yesterday, while German and Nordic prices were mostly flat or down. The move in feedstocks, gas particularly, was more of a short squeeze or technical correction as no fundamental changes took place. This morning, gas is trading around flat to the previous close with coal and oil slightly down, carbon is unchanged. Weather forecasts remain at or above normal for the balance of February and into early March with strong wind output expected for the same period. UK power is up slightly in early trading along with German and Nordic power as traders assess the bounce in gas and the fundamental situation.
Wednesday 19th February 2020 - Gas prices were whipsawed yesterday, rising from the opening bell setting new day on day highs before coming into resistance around midday, by the afternoon support began to wane and contracts came under pressure, dropping into the close to lose some value. Support for spot prices held throughout the day due to a short system which relied on stock draws to balance. In the UK both LNG and conventional storages are much lower than on the continent, however, refills are expected from the arrivals of LNG over the balance of the month. The system is short again today, spot and balance of winter prices are up curve prices are mostly flat in early trade action
Thursday 20th February 2020 - Gas prices held steady, fell and rose yesterday to end the session mostly flat day on day as traders chased the downside and upside looking for a trend to develop. Gains in oil and carbon provided some support while overall commodities were mostly unchanged and stock markets drifted lower. This morning, the system is less short than it has been over the past week or so, weather forecasts have been revised cooler for next week with the possibility of a dip below seasonal normal by up to 1 degree for a couple days. LNG cargos are building on the water as high winds have kept deliveries a bit lower as the queue lengthens. Gas is trading flat to the previous close in early trade action, oil, coal, power and carbon are either flat or dealing slightly lower after the opening bell
Friday 21st February 2020 - Gas contracts sank slightly yesterday, along with coal and power. Throughout the first half of the session the bears were in control pressuring the market only losing out to the bulls in the last two hours of trading where they turned the momentum limiting the downside. This morning, the cooler weather for next week has been confirmed, but for the first time in several weeks the system is comfortably supplied. Flows from all sources are stable and with the passing of a recent storm LNG cargos are expected to begin discharging in the UK, 4 vessels today. In early trade action spot prices are down while the curve is down only a touch, coal and oil are also slightly weaker.
Monday 24th February 2020 - Gas contracts were dealt lower into the close of last week, following on softness in the oil market and a well-supplied system from open to close of trading. High winds that have been producing records amounts of wind power over the past couple weeks in the both the UK and EU have also been delaying the delivery of LNG vessels to the UK, continuation of strong winds this week may continue to hamper delivery and delay send outs, vessels have been forced to wait in the Irish Sea. This morning, the system is short as temperatures begin to fall toward the seasonal normal, they are expected to stay there for the 15-day outlook, all other flows remain stable.
Tuesday 25th February 2020 - Gas prices sank yesterday along with oil and global equities markets in a massive risk off event, a short system throughout the trading session was only able to hold minor gains on the spot contract in the UK. This morning, the system is much closer to balance with only a minor deficit being forecast at the open of trading activities, coal and oil are both up along with equity markets across Europe. Weather forecasts are holding with temperatures expected to be just below seasonal normal for the 15-day outlook, supplies remain ample and as the winds ease more LNG vessels are expected to discharge. Gas is trading flat to yesterday's close, technical's remain bearish with little fundamental support.
Wednesday 26th February 2020 - Gas prices took another hit yesterday, along with oil and equities which were sent reeling from the shocks related to the latest developments in the Coronavirus. Continuing fears of further economic contraction rocked the global commodities markets with gas taking a hit as a result. This morning, the system is short 30mcm, 17 LNG cargos are expected to the UK over the next 10 days, with 7 cargos waiting near the ports for better conditions to enter and weather conditions have improved slightly becoming a touch warmer in the latest forecast. Coal, oil power and gas are all trading flat to slightly lower in early trade action, spot prices retain the greatest support.
Thursday 27th February 2020 - Gas prices staged a modest recovery yesterday after touching fresh lows intraday, profit taking, and short supply situation lifted both the curve and spot prices. Broader energy markets remained weak after stock markets failed to hold early gains, oil was dealt lower along with industrial metals like copper as market participants fled equities and commodities for the safety of bonds and gold. This morning, the system is very short, increasing demand coupled with a drop in supplies, LNG and storage send outs, have created the deficit a brief surge of imports to the UK from the continent may be needed again to balance out the day. Gas is trading mostly flat day on day, while coal and oil are dealing lower along with power in Germany and carbon contracts, other markets have yet to trade.
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