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.
Friday 28th February 2020 - Gas prices continued to weaken yesterday, coming under pressure from falling commodity prices in coal, oil, power and carbon as stock markets were sent into a tailspin. US markets gave up 4% of value and in this correction major European and American markets are down 10%-12% with further losses expected today. This morning, the system is balanced on the back of falling demand on warmer weather, flows from Norway, Russia and LNG send outs are all improved on the day. Pressure is expected to continue for gas today with coal, oil, power and carbon all dealing lower in early trade action. Another bearish start for equities is adding to the negative mood which only compounds the woes for gas, prices are down slightly after the first few trades.
Market Comments March
Monday 2nd March 2020 - Gas prices closed out the week on an up day after taking successive losses. Strength in the spot market lifted contracts while the close out of positions ahead of the March contract expiry provided buying interest. This lift came in the face of a greater equity and commodity sell-off which saw markets tank and oil fall $2/bbl. This morning, markets are looking a bit more stable after announcements over the weekend that the US Federal reserve and the Japanese central back were prepared to cut rates and buy repos, Australia and New Zealand are also expected to join in. OPEC+ will meet on March 5th and production cuts are expected, oil is up in early trading. The system is short as demand picks up from cooler temperatures, flows remain stable with contracts trading flat at the open.
Tuesday 3rd March 2020 - UK gas prices staged a modest recovery yesterday, although it was not a short system of change in the weather but a collapse in the pound that precipitated the lift. The contrasting evidence comes from the continental markets where gas prices were little changed. Stock markets in the US and oil prices staged a recovery as well with 5% gains on the back of commitments from central bankers and the US FED to combat the virus induced economic contraction. This morning, the system is balanced, oil is up modestly while coal, power and carbon are flat to slightly lower. Gas is also trading flat as traders look to the broader markets for direction.
Wednesday March 4th 2020 - Gas prices rebounded yesterday in the UK and on the continent, lifted from the back end of the curve, longer dated contracts, which followed on gains in stocks and intraday moves in coal and power. Low prices levels and a bearish narrative have brought out some buyers for long-term contracts a relatively lower liquidity means buyers more easily push prices up when demand pressure increases. This morning, the system is long as supply increases outpace those of demand, flows remain robust and stocks well above last years level. Stock markets in Europe are opening the day in positive territory as rate cuts and emergency measures are providing some support to the markets, Commodity prices are down slightly in early trade action which includes gas dealing slightly down from yesterday.
Thursday March 5th 2020 - UK gas prices dipped yesterday in what has been a bit of a yo-yo market with no discernible up or downside direction. In the broader energy markets, oil retreated as discord in the OPEC+ alliance wavered on the need for cuts with Russia less interested while Saudi Arabia more insistent, coal and carbon gained, and power was mixed. This morning, spot prices should hold firm on an undersupplied UK system, coal and oil are flat to slightly down with power markets and carbon dealing unchanged in early trade action. Gas prices are bid flat to the close across the most liquid curve contracts and look to be receiving support from the spot market. Emergency rate cuts across G7 nations, and pledges from the US congress and IMF to make funds available to stabilize economies has buoyed global stock markets which are up in both Asia and Europe.
Friday 6th March 2020 - Gas prices followed oil yesterday, softening slightly after gains the previous day. Weather forecasts have turned a touch cooler for next week but remain close to seasonal normal, pipeline flows and LNG send-outs remain stable. This morning, stock markets have soured again trading down around 2% in Asia with futures under pressure in Europe from the opening bell. Oil is down and bond buying continues as traders look to insulate themselves from risk. UK gas and prices on the continent are down marginally on the curve while spot trading is stronger on the back of an undersupplied system, flows from the continent will likely come to fill the gap between demand and supply.
Monday 9th March 2020 - Gas prices suffered further losses on Friday as news of discord from the OPEC+ meeting spilled out into the markets as Russia rebuffed Saudi Arabia on further production cuts, Brent crude oil took a $5/bbl. hit while other commodities were less battered, but the whole complex traded down on the day. This morning is truly a black Monday, oil has fallen 25% in Asian and European markets and a bloodbath is shaping up for equity markets with falls from 5-10% in lost value as the oil rout and virus threat compound to shake the markets with several exchanges close to entering technical bear markets, namely Italy. The system is close to balanced and flows have not been interrupted, but the driver today is clearly the macro chaos. contracts already hard hit are dealing lower with losses consistent across the curve from spot to seasons.
Tuesday 10th March 2020 - Yesterday's market was one for the record books, this most recent 'Black Monday' saw the second largest single day drop in oil prices since the start of the 1991 Gulf War where crude tumbled 35%. Stocks sank around the world as market and individual stock circuit breakers kicked in, forcing traders into 'time-outs' before additional selling could begin. In more news to roil markets Italy has expanded its quarantine lock-down to the rest of the country and football stadiums will host games empty of fans, on the bright side the US administration is putting together more aid to support the markets and workers which may lift the mood of traders. This morning, oil has had a modest bounce along with Asian markets and European equity futures. The system is balanced, and the gas markets are stable, and rather boring compared to the macro sideshow going on around them.
Wednesday 11th March 2020 - Yesterday saw a bounce in the commodity complex with hopes of stimulus packages on offer in Europe and the US to support the coronavirus ravaged global economy. Gains in crude filtered through coal, gas and into power and carbon as the Monday moved appear to be a bit of an early over reaction. This morning, equity markets are off in Asia, the Bank of England has made an emergency rate cut and the US is forecast to have added 6 million barrels of crude to storages last week. Oil is trading mostly unchanged day on day, gas is down slightly along with power coal and carbon, all of which are trading in low volume as traders sort out what direction the market will take today.
Thursday 12th March 2020 - Prices on the NBP have opened lower this morning as markets move downwards again with coronavirus affecting global commodity demand. The US has restricted travel from mainland Europe in a bid to slow the spread of the virus. The UK government also looks set to move from a ‘containment’ phase to a ‘delay’ phase today where social distancing measures could be implemented, both drivers of which have impacted business, with the FTSE down around 5% at time of writing. In addition, the UAE has announced its intention to join Saudi Arabia in increasing crude production, escalating a price war with Russia which is also impacting prices to the downside.
Friday 13th March 2020 - Yesterday's big market story was not in the UK or European commodity markets but in global equity markets. The Europe Stoxx 600 had its worst single day drop on record while the US S&P 500 had its biggest weekly drop and the largest one day down move since the original BLACK MONDAY in 1987. The Italian stock market was hit particularly hard with a drop in value of 17%. Falling crude, coal and carbon did little to inspire gas, minor gains were made in the spot while the longer dated contracts lost less than a penny in the UK and 25 cents on the continent. This morning, the system is marginally short, oil is having a bounce and bringing gas with it, at least in sentiment. Stock markets are up as the billions being pumped into the markets and more aggressive health measures are providing some reason for cautious optimism.
Monday 16th March 2020 - Gas prices were little changed on Friday, as the global energy complex moved sideways, while equity markets improved. Over the weekend, further travel restrictions, bans on public gatherings and closures of commercial and retail slowed economic demand. The US FED cut interest rates by 1% and initiated a massive bond buying program. Despite these efforts, stocks are down in Asia, along with crude oil and energy in Europe. Gas prices are down in early trading along with coal, oil and power, the reduction in associated pollution has cut C02 credits hard which are flirting with 20EUR /tonne.
Tuesday 17th March 2020 - Yesterday's trading was another for the record books, with US futures taking the biggest drubbing since 1987. Oil briefly dipped below $30/bbl, which sent the broader energy complex tumbling. Prices for jet fuel, and gasoline traded low enough to price below the cost of production from crude, closer to home, power and carbon in Europe were hit hardest while NBP gas dropped but only modestly compared to the surrounding carnage. This morning, stocks in Asia are up, oil is up about a buck helping gas move into positive territory, a short system and cooling temperatures could support the spot price.
Wednesday 18th March 2020 - Gas prices remain under pressure with the broader market for commodities and slumping Equity markets, talk of recession grows louder and the chorus of banks cutting forecasts is coming into unison. Losses in the energy markets have become smaller for coal, oil and gas as power losses accelerate. The efforts to contain the spread is beginning to show up in demand data with Italy and Austria showing losses for gas demand around 10% and power demand between 15-20%, expectations are for similar levels to hit other countries in Europe and the UK as more stringent measures take hold. This morning the system is short, oil and coal are down, and gas is trading slightly lower in early trade action.
Thursday 19th March 2020 - Gas prices were only marginally lower after close of trading yesterday with the greatest losses on the longer dated contracts which have retained the most value. Oil took another drubbing and carbon sank 3EUR taking power down with it, coal and gas by comparison were mostly unscathed. Increases in the infection rate outside China continues to climb. According to the World Health Organization, the day-on-day increase in non-China cases is running about 12,000, the overall cumulative infection case load has exceeded 100,000. The non-China death toll is 4,200, while China deaths total 3,231. With some resumption of normalcy in China. Chinese energy and economic metrics continue to improve. Though the rate of improvement has been slow. Today the system is short, the ECB has come with its own money bazooka (750B bond buying program), and energy contracts are up including oil, coal and gas.
Friday 20th March 2020 - Gas prices took a bounce yesterday along with the broader energy complex, oil led the way signalling the space for a move in gas, power and carbon. Gain in UK gas prices were concentrated on the weakest contracts, the balance of 2020, where longer dated contracts were mostly unchanged. This morning, stocks are up in Asia and a bounce is expected in Europe at the open. Oil is up about 5% on the Brent front month contract and now has a tentative footing back at $30/Bbl. The system is very long this morning, 35mcm, so pressure on spot prices is expected, the curve is unchanged at the moment, trading around the close. Power prices are unchanged with coal down and carbon up.
Monday 23rd March 2020 - Gas prices tumbled on Friday capping off a week of bearish market news as the European economy slows down amid stay at home precautions and social distancing measures shutter businesses and factories. The drop in NBP contracts outpaced those on the continent as pound strength lowered the cost of importing the fuel. This morning, the system is 30mcm long which will apply pressure to the spot as excess volumes must be stored or exported, cooler temperatures this week could help to provide some additional demand, March to date demand in the UK has been up almost 10% vs, the 5-year average, lower wind output could also prop up demand. In early trade action gas prices are a touch softer on the front month and spot as oil and equities open up in the red.
Tuesday 24th March 2020 – It was a pretty normal market day for gas in the UK and on the continent on Monday, an oversupplied system in the UK brought pressure to spot prices, while lower carbon, coal and power prices served to reinforce bearish sentiment on the curve. The chaos in the equities markets, additional QE from the US FED and the bickering over stimulus in the American Congress was more of a sideshow. LNG arrivals to the UK have been cut to a third of what they were only a couple of weeks ago, lower summer demand and a shift in the arrivals to continental ports for storage injection is at play. This morning, the system is closer to balanced, coal, oil Asian and European equities are all up as a cautious risk-on appetite appears to be building.
Wednesday 25th March 2020 -Gas prices edged down slightly in the UK and crept up on the continent during yesterday's session as markets were given to little direction and the major driver became the strengthening pound. On the corona virus beat, Spain recorded its worst death toll for a single day, in Italy after two days of stable numbers, deaths increased sharply again. This morning, the system is slightly short on cooler weather and lower wind output lifting demand for gas fired power generation. Equity markets, oil and metals are up in early trade action and European futures look to be moving the same way. Coal, carbon are power are all up and gas is making some early gains from the open of trading.
Thursday 26th March 2020 - There was little movement in the gas market yesterday with minor gains and losses taking place across the forward curve, increased weather related demand lifted spot prices in the UK despite waning demand from both the commercial and industrial sectors. Commodity markets were left mostly flat yesterday despite a second day of gains in equities and futures markets, panic buying of the dollar waned and both the euro and pound rose. This morning, the system is balanced as a dip in demand is being met with lower production. New cases of COVID-19 appear to be stabilizing in Italy for the 4th day, by contrast Spanish outbreaks are still rising. Markets are mostly flat at the open, German power is showing the largest drops in power or gas as the closure of factory demand picks up.
Friday 27th March 2020 - Today, the US overtakes China with the most cases for COVID-19, in Italy cases surpassed 80,000 with a mortality of 10%, new cases have stabilized in the 5-6,000/day range. The system is long and despite an uptick in supply, demand has outpaced putting renewed pressure on prices.
Monday March 30th March 2020 - Prices have opened lower across the NBP curve today with increase losses at the prompt with reducing industrial demand for commodities and warmer weather forecasts. LNG send out has dropped off on the supply side with only 2 cargos heading to the UK by the 16th April. As the Chinese economy recovers from the impact of coronavirus it is likely that China could become an LNG sink with the price incentive there to send LNG to China for increased profits. There has been a significant shift in weather forecasts over the weekend with a notable warmer turn from the 6th of April onwards. These models are pressuring prices on the prompt downwards. Brent has recovered somewhat from the 7% drop seen on Friday, but the outlook remains bearish with no sign of the price war between Saudi Arabia and Russia abating. Coronavirus also continues to impact global demand for oil.
Tuesday March 31st 2020 - Gas prices continued to slump in the UK as the demand outlooks weaken and temperatures are set to improve, a harsh sell-off in oil brought more bearishness to the broader commodity complex. In equities, the American markets managed gains for 4 of the last 5 sessions on optimism about a vaccine deal between the US government and Johnson & Johnson, coupled with further green shoots of economic recovery in China. This morning the system is long, oil is up on news of Trump reaching out to Putin to discuss oil and a surprise rebound in Chinese PMI data to 52 from 35. Along with oil, coal is up and so is carbon which may help to lift both gas and in turn power during the session if gains can be sustained.
Market Comments April
Wednesday 1st April 2020 - Gas prices fell on the spot and nearby months as warm weather and the quarantine measures sapped demand, while longer dated contracts found support from hedging and intraday gains on oil that were only reversed after European markets closed. Italy has had two days of lower and more stable caseload increases of the coronavirus while Spain continues to see record death tolls, cabin fever is starting to bite as the Danish PM hints after Easter as a possible return to more normal conditions. This morning, the system is balanced, oil is down and the OPEC+ supply agreement has been suspended, allowing all members to pump as much oil as they like. Gas prices are down marginally, along with coal, power and carbon.
Thursday 2nd April 2020 - This morning, oil has rebounded 10% as hopes that talks between the US - Russia - Saudi Arabia can help to ease the oil supply glut, European stock markets are in positive territory and equity futures for the US are making gains. Gas prices have rebounded on the spot due to a modest shortfall in supplies while the curve moves up the broader commodity complex.
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