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 the curve moves up the broader commodity complex.
Friday 4th April 2020 - It was the tweet heard around the world, US president Donald Trump, tweeted that Russia and Saudi Arabia would cut 10-15 Million Bbl./day to help rebalance supply and demand, the latter of which has been crushed by coronavirus mitigation efforts. Oil jumped 40% in intraday trading before closing up at around $30/Bbl. Gas prices closed marginally higher after an intraday rally which was met with aggressive selling action in the latter half of the session. This morning, the system is long and warm, often sunny, weather is expected for the next 5 days, a fact likely to challenge social distancing efforts as Easter holidays near. Gas is dealing slightly lower in early action along with coal while oil is marginally down.
Monday 6th April 2020 - On Friday, mild weather and compromised demand pressured spot and May-20 prices while gains in oil lifted the curve on bullish sentiment that OPEC+ would return to the table to discuss output cuts to stabilize global oil prices. Over the weekend, further stabilization of the COVID-19 situation in both Italy and Spain has tentatively materialized, falling deaths and new cases flat to lower each day, providing some optimism that the 'curve flattening' is taking place. This morning, optimism and risk on action in Asian markets has spilled over into European and US equity futures, gas is trading up marginally with the softer pound while continental trade is flat, the system is marginally long with warm weather forecast.
Tuesday 7th April 2020 - Gas prices rebounded yesterday, following on moves in the broader energy market and positive sentiment from equities markets which gained on the back of improving conditions in Italy and Spain at the epicentre of the European virus outbreak. The biggest mover was not a commodity that will be consumed but that is bought to cover real consumption, carbon credits which outpaced gains in gas, coal or even power as the market traded off moves in stock markets. This morning, the system is long, energy markets remain positive as news that Norway may join in the OPEC+ meetings to help cut production on a wider scale. Gas is up marginally in early trading and may make further gains if it can get support from other commodities and equities, the market is fundamentally oversupplied and demand 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 remains low on lockdowns globally.
Wednesday 8th April 2020 - Commodity markets have been following around the equities markets like a lost puppy over the last couple of weeks and yesterday was no exception. Big gains were made early as Europe's stock markets soared on the back of bullish sentiment in Asia and improving COVID-19 conditions, by the afternoon the American markets gained early, entered bull market territory and were sent lower into the close, reversing gains in gas, power and especially carbon which mirrored the moves in equities. At the close minor gains were marked, today, those gains have been lost in early trading with coal, gas, power and carbon trading lower. All eyes on Thursday when OPEC+, +More (G20 Energy ministers) will join to talk global cuts to production.
Thursday 9th April 2020 - Gas and power prices in the UK and across Europe sank yesterday as the focus returned to the underlying fundamentals, despite some gains in both oil and carbon which have moved more in line with Equities over the past couple of weeks. Spot price weakness and mild temperatures pressured gas along with modest gains for the sterling upon news of improving conditions for the UK PM. This morning, the system is long, however, markets are clawing back some of their losses on the back of optimism for OPEC++ to announce production cuts after today's emergency meeting. Coal, oil and Equities are all up helping to support gas in early trade action, thin volumes and hedging before the Easter holiday may add to volatility.
Tuesday 14th April 2020 - As markets were closed for the Easter long weekend along with other European commodity and Equity markets, only oil continued to trade. Over the weekend, OPEC+ agreed to cut roughly 10M Bbl/day from production, against a demand drop which is estimated to be somewhere between 25-35M Bbl/day at the peak, today Norway and the Texas Railroad Commission will consider whether they will join the alliance. Gas prices are down slightly with the first trades, as coal is offered lower and German power deals down. Oil is only up a around a quarter, stock markets in Asia and equity futures point up. The system is slightly short but sunny windy weather suggests demand for power and spot gas will be soft.
Wednesday 15th April 2020 - The markets reopened on a bearish note with coal, oil and gas all tumbling after the Easter break. OPEC++ supply cuts, virus improvements, and government interventions have failed to provide an uplift to energy markets which continue to be awash in supplies at a time of an extreme curtailment in demand. This morning, the system is marginally short, equity indexes and futures markets are in the red and oil has dipped below $30/Bbl. Injections have begun into storage facilities that are at historic levels of fullness signalling a struggle to contain all the supplies ahead of the winter demand season. Prices are flat in opening action as the market recalibrates.
Thursday 16th April 2020 - Today, the system is long and injections into storages have kicked off at a fevered pace. Winter contracts are trading at 2x that of the Day-Ahead making the profit from storing gas very attractive. In early trade action gas prices are slightly higher, as power traders lift contracts along with carbon pushing up the power price.
Friday 17th April 2020 - Gas prices got a lift yesterday from the power market as French authorities reduced expected output from nuclear facilities on low prices and faltering demand. The result was a strong increase in carbon prices, a signal, power traders believe more carbon based power will be needed, power and gas prices rose in concert. This morning, stock markets are up, and gas will follow on as will the rest of the commodity complex, news about easing lock-down conditions and returning to work has increased enthusiasm on the buy-side.
Monday 20th April 2020 - Mixed bag at open today with prices at the front of the curve down with the back remaining supported. The front of the NBP curve is being pressured by a well-supplied system with good wind and LNG send out, as well as milder weather. The back is being driven by gains in carbon off the back of EDF announcing a 20% reduction in Nuclear output in France due to the coronavirus pandemic with a drop in demand. Gas for power demand is also significantly reduced at 8mcm with strong wind generation. Injections into storage and exports to Europe are reducing the long. There have been minimal changes in the weather forecasts over the weekend. Generally, the UK is going to be above seasonal normal up until the 27th where temps are set to dip back down to normals. OPEC cuts announced last week doing very little to support the market as the coronavirus pandemic continues to reduce global demand.
Tuesday 21st April 2020 - Stocks and commodities fell yesterday, with the European energy complex moving into the red across the board as gas joined coal and oil to the downside. The big story in energy was not in Europe, but in the USA where crude prices for the WTI May contract fell to -$40/bbl as paper traders scrambled to find anyone to take physical crude, in effect paying the market to take oil. This morning oil has rebounded 100% to trade at $0.10/Bbl in the US, in Europe Brent oil is trading just under $25/Bbl. Gas markets are trading flat to slightly higher in early action while coal, continental power and carbon all deal lower.
Wednesday 22nd April 2020 - Prices are down across the NBP curve again today with heavy losses in oil continuing to drive the back and reduced demand with the milder weather and ample supply with good LNG send out driving the front of the curve downwards. Brent fell around 20% yesterday and is down another 6% again today at time of writing. Storage capacity is running out across the world with predictions that the US could completely run out of storage in 2 weeks. Supply also continues to far outweigh demand with the coronavirus pandemic and as a result we have seen oil prices in freefall and in some cases turn negative with the May WTI contract. With negative prices oil producers pay buyers to take oil off their hands and so with prices so low we should start to see a global shutdown of oil production otherwise producers leave themselves at the mercy of the market. The system is 6mcm short with increased IUK exports and injections into storage and a drop in LNG send out despite a healthy outlook of 10 cargos expected before May 12th. Demand remains low and is 23mcm below seasonal normal with the milder weather and good wind generation.
Thursday 23rd April 2020 - Gas prices were dealt lower yesterday in the UK and on the continent, although the drop was minor as contracts are already near record lows, stock markets gained, and the rest of the European energy complex followed save for coal and gas. This morning, the system is marginally long, oil, both WTI and Brent are further up, and coal is sideways. Flows remain robust and gas prices are falling further in the spot and for the front month with seasonal contracts holding up much better. European equity markets are set to open in positive territory as more economies relax restrictions on their respective lockdowns.
Friday 24th April 2020 - Gas prices tumbled yesterday in the second half of the session, after making gains in the first half along with equities and oil. By the end of the day, only oil and carbon managed to hang on to gains as gas, coal and power sank. This morning, the market has opened flat to the close, with the spot dropping slightly on an oversupplied UK system. Oil is in positive territory, while European equities retrace on news that a drug to treat COVID-19 failed in early trials. Countries and regions around Europe and the rest of the world continue to slowly reopen or plan for their gradual return.
Monday 27th April 2020 - UK gas contracts followed the broader markets lower, along with coal, power and carbon credits. Conventional and LNG storages in the UK and Germany are between 70-75% full as demand remains impaired due to the COVID-19 shut-ins. Over the weekend Saudi Arabia, Kuwait, and Nigeria all began to cut production ahead of the May 1st start of the OPEC+ supply curtailment plans, in the US drillers laid down another 60 drilling rigs with activity and completions slowing rapidly as the oil industry tries to cut supply before storage capacity is exceeded. This morning, the system is balanced, gas prices are mostly unchanged in early trade action, oil and coal are down while power and carbon prices are up.
Tuesday 28th April 2020 - Overnight, US oil prices fell 25% as the US oil ETF rolled its positions selling the front month and buying longer dated contracts. This morning, the system is long, coal and oil are dealing lower while gas is trading mostly flat in low volume. Equities and futures markets in Asia and Europe are mostly positive as company earnings announcements roll in.
Wednesday 29th April 2020 - Today, the system is marginally long, a return to more normal/cooler weather has lifted demand and prices for the Day-Ahead contract as well as the front month. Coal is bid at yesterday's close and oil is up almost $2/Bbl. Positive sentiment from Asian stock markets and European and US equity futures could provide some further lift today.
Thursday 30th April 2020 - Gas prices softened late in the session to close the down on the day despite gains in oil, coal and equities, as spot price weakness triggered the sell-offs. This morning, oil, coal and gas are up, getting a lift from the spot market and from bullish sentiment. Both UK and continental gas prices rise slightly along with power and carbon contracts. COVID-19 cases continue to come under control in European and American hotspots prompting further relaxations and plans for reopening economies. Norway has joined the OPEC+ cartel to cut its oil production to help lift prices and avoid a complete filling of storages worldwide, these are the first such cuts in almost two decades.
Market Comments May
Friday 1st May 2020 - Gas prices closed out the month of April flat in thin volume as traders spent most of their meagre efforts to do the last rebalancing of positions ahead of the June contract moving into front month status. Oil continued to find its footing as global supply cuts increased which has put somewhat of a floor under the downside for now, coal followed on sentiment while carbon contracts sank with European stock markets, power was dealt slightly down. This morning, the system is short on the back of forecasts for continued cool temperatures and reduced wind output. Gains in demand expected in May should help to lift prices on the curve, however, the continued influx of LNG and high storage levels will keep the bulls from exerting full control. UK gas prices are up in early trading.
Monday 4th May 2020 - Today, the system is roughly 20mcm short, and flows from Russia and Norway have dropped off, while LNG send-out remain robust and storages are nearing 80% full in both Germany and the UK, foreshadowing full capacity 1-2 months ahead of the start of winter. Oil and equities are down from the opening bell while gas and coal are marginally higher in early trading, power and carbon are flat.
Tuesday 5th May 2020 - UK gas prices rallied yesterday, lifted by increased demand in the spot amidst an undersupplied system. Weakness in GBP vs. EUR day on day helped to lift the NBP against continental hubs. This morning, the markets continue to make minor recoveries in price as demand slowly creeps upward and the system kicks off the day in a balanced position. Gains in equities and futures in Asian and Europe signal more conviction in the global recovery. Oil is also gaining and has made it above $20 in the US with Brent closing in on $30 as good news from Total and Shell has been announced, they will continue their dividends which has lifted the sector as more companies in the US cut production.
Wednesday 6th May 2020 - Today, the system is short which should bring some support to spot and near term prices. Oil and equity futures in Europe are down slightly while German power and carbon have modest gains in early trade action, gas is trading flat to the close in thin volume.
Thursday 7th May 2020 - Gas prices rebounded yesterday, lifted by spot markets responding to an undersupplied UK system, while longer dated contracts were lifted on a handful of trades as liquidity remains poor ahead of a bank holiday. The broader energy complex did little to lift prices for gas as oil's rise was stalled, while coal, power and carbon were unable to establish a clear direction. This morning, the system is balanced; flows from Norway and LNG send outs follow Russian gas arrivals to the downside as the gas markets downshift to summer operations. Stock markets in Europe have opened stronger, oil is trading mostly unchanged to the previous close, continental power markets and carbon are slightly lower while coal is slightly higher. Gas has made spot gains while the curve is unchanged in early trade action.
Monday 11th May 2020 - The UK and much of the continent was closed for trading on Friday due to a bank holiday. In Equities and oil, global markets were soft on Friday while oil managed to finish higher on the week as stockpiles around the world stop their growth and some signs of contraction took place. Today, the system is 30mcm long in the UK as Norway reroutes gas destined for France to the UK due to pipeline maintenance. Across Europe and the UK as economies look to restart and both oil and coal are dealing slightly down while gas prices are sideways in early trade action.
Tuesday 12th May 2020 - Gas prices sunk from the spot out forward to the balance of summer, with longer dated contracts gaining marginally. With lower temperatures, demand is picking up however, the UK remains balanced this morning. Norway is beginning some of the maintenance it has put off cutting flows to both France and the Netherlands, while rerouting some volumes via the UK, expect these pipelines to continue to see work for the next week. Saudi Arabia has announced it will cut another 1 Million barrels/day of production bringing global cuts in the OPEC+ alliance to around 11 Million Bbl/day, just shy of the demand drop of 15 Million Bbl/day, some producers are calling for the globe to reach a balance now in Q3 before prices begin to rise. Oil is up this morning, coal is down, and gas is sideway in early trading, while power and carbon are also down slightly.
Wednesday 13th May 2020 - Gas prices slipped yesterday, find pressure building across the curve from the spot to the longer dated seasonal contracts. Fundamental weakness in gas was joined with falling prices for coal, power and carbon which created a virtuous selling cycle, only oil managed to make gains. This morning, the system is short, part of the Norwegian maintenance is over while some remains, effecting flows to the downside. European stock markets are dealing lower, while oil is marginally in the red. Power and carbon are also a touch softer while gas is making minor gains on today's supply shortfall.
Thursday 14th May 2020 - Gas prices softened slightly yesterday in both the UK and on the continent as oil and coal weakened amid a stock market sell-off. With many market heavy weights calling company valuations over heated and markets just too frothy, gains have reversed as profits are taken and news flow turns more bearish. Today, oil is gaining on Saudi cuts to customers in Asia, Europe and the US against the uncertain recovery in demand. Stock markets are down in Asia and Europe, the system is balanced, and weather forecasts suggest warmer weather is on the way. Gas prices are flat in early trading, coal looks set to make some modest gains with oil.
Friday 15th May 2020 - Gas got a lift yesterday from Crude euphoria as oil gained on extra Saudi cuts and low liquidity which caused traders to have to bid more aggressively to find sellers of the less traded and longer dated contracts. Stock markets in the US managed to make gains from a low opening, which was aided by the moves in oil, coal in turn lifting gas, power and carbon. Today, the system is marginally long, Norwegian production remains slightly muted due to maintenance and weather forecasts have been adjusted slightly cooler at the end of the 15-day outlook. Oil continues to move up and will cap off a 3rd week of gains, coal, power and carbon are all up and gas is making minor gains, the smallest of the complex in early trade action.
Monday 18th May 2020 - Longer dated gas prices rose with oil and equities while near term demand remained muted with minor losses for the balance of summer contracts. This morning, the system is balanced, oil has passed the $30 mark for WTI while Brent gains in Europe. Equities, power and carbon are dealing higher in early action, following on overnight gains in Asia. Gas is trading marginally higher from the opening bell as demand improves on economic restarts across the region.
Tuesday 19th May 2020 - UK gas prices were up first thing yesterday and then came off throughout the day as far as Winter 2022 prices; this same trend has continued into today as well. Prices are supported by positive early results on a potential coronavirus vaccine and optimism about global economic activity slowly resuming to the new normal. OPEC and OPEC+ countries are sticking to the agreed cuts to production, which is giving strength to Oil price which are increasing day on day. The UK/European weather forecast has seen minor changes to the wind generation forecasted for this weekend to be higher than average for May; the sunny weather will be put on hold over the weekend however it will return early next week to higher than seasonal normal temperatures. GBP has taken a downturn versus the US dollar over the last week, due to fears that according to the UK Chancellor Rishi Sunak, the UK is “very likely” to see a “significant recession” – the risk of coming out of recession is currently being priced into 2021 prices beginning Q1-21 onwards.
Wednesday 20th May 2020 - Gas prices rallied and then reversed yesterday closing down slightly after a day of mixed moves, softness in oil, and coal along with retracement in European equities after a previous day monster rally gave direction. This morning the system is long, LNG storages are above 90% and temperatures are above normal, all signals that prices may retrace further, coal and German power are down while oil and carbon are keeping their 'heads' just above water for the time being. Oil storages in the US are forecast to have dropped by 5 million barrels last week, Government data will be out today. In early trade action, UK gas is offered near the close with only spot contracts changing hands thus far.
Thursday 21st May 2020 - Today, the system is slightly undersupplied, and it is a holiday in many continental European countries like Germany and Denmark. Markets remain open everywhere save for the Nordics, however trade volume will be very low. Oil is up, while coal, German power and carbon are down, gas is dealing slightly lower at the front of the curve with support on the seasons in early trade action.
Friday 22nd May 2020 - Gas prices in the UK took a sharp drop yesterday, led by falling spot prices on weak 'holiday' demand around Europe and high wind output. The result of spot weakness dragged prices on two summer month contracts to fall into the single digits. Similar weakness was noted on the continent with prices closing in on marginal cost of production for Norwegian gas, by contrast falling prices for coal, carbon and power were marginal by comparison and they remained well above previous lows. Today, the political turmoil and protests in Hong Kong against further incursions from Beijing have spared a 5% sell off on the Hang Seng which has rippled into oil and European equities which have fallen from the opening bell. The system is long again which will apply pressure to prices on the spot, and likely tug at the curve with help from a bearish energy complex and over all negative sentiment.
Tuesday 26th May 2020 - Gas trading in the UK took a break yesterday for a bank holiday, leaving continental traders to fend for themselves and chart their own direction on the day. The energy complex rose with oil leading the way on statements from both the IEA and Russia that suggest the global oil market will balance later this summer, leading to a run in stock markets, coal and the continental power markets. This morning, the system is balanced, European equities are up following on gains in Asia and further strengthening in oil prices. Gas markets are a touch softer dealing slightly lower along with power and carbon while coal is making gains on increasing demand in China.
Wednesday 27th May 2020 - This morning, market futures are pointing towards a positive opening for equities in Europe and the UK. Gas contracts are a touch softer on the continent for spot and balance of summer contracts, longer dated contracts retain their value, much the same in the UK with a bit more strength in pricing due to a dip in the pound vs. the euro.
Thursday 28th May 2020 - Energy markets took a drubbing yesterday, as oil dropped on fears Russia would push to return production levels higher in July, when the current OPEC+ deal expires. Coal and gas tumbled taking power down with them as the complex was overrun by bears, despite the gains in global equities markets and energy company stocks. This morning, the system is balanced, warmer than normal weather and a coming long weekend sap demand, but supplies are dropping to balance the market, LNG arrivals to the UK have been falling and will help remove some pressure on the system. In early trade action oil is down, while coal and power are sideways, carbon is slightly higher, gas prices are flat to slightly lower in a handful of early trades.
Friday 29th May 2020 - Today the system is long with both EUA's and coal up in early trading. First couple of trades show a marginal increase but any moves in the rest of the energy complex should mostly affect longer dated contracts.
Market Comments June
Monday 1st June 2020 - Prices have opened lower on the front of the NBP curve this morning as a very healthy storage picture and warmer weather forecasts for the rest of summer continue to pull prices downwards. The back opened in line with Friday’s close, however, further dated contracts have since lost value throughout this morning. Oil is being supported by a proposal from Saudi Arabia to extend production cuts to the end of the year with an OPEC meeting, originally proposed on the 9th and 10th of June, being brought forward to the 4th. It is thought that an agreement on further cuts could be achieved at this meeting. The system is 14mcm long with LDZ demand low with the warmer weather. UKCS and LNG continue to
supply the UK with muted flows also along the Langeled pipeline. On the demand side, we have good storage injections and exports along both the BBL and IUK offloading gas to Europe. There are 3 LNG cargos expected to the UK by the 9th of June. On weather, near term forecasts have moved slightly colder over the weekend with the current warm spell expected to end on Thursday where temps will drop to around 3 degrees below seasonal normal before a slow pick back up as we move through the back end of next week.
Tuesday 2nd June 2020 - Gas prices tumbled on Monday, taking power and carbon down with them, while coal and oil managed to make modest gains despite turmoil in the US over recent police violence, sparking protests and stock market retracements. OPEC+ will move up its meeting a week and markets are cautiously optimistic the Kremlin will extend output cuts to give the market more time to rebalance as demand improves. This morning, oil and coal are up, and gas is moving higher as well. Equities look to move positive in Europe following on gains in Asia. Flows have begun to decline now from Russia, Norway and LNG as the latter has shown few loadings in the US coupled cancelations for cargos, despite this, storages continue to expand with Germany now 85% full which will keep pressure on balance of summer pricing.
Wednesday 3rd June 2020 - A short system helped propel spot prices in the UK to gains day-on-day yesterday of over 2p, while a risk on attitude in equities lifted all commodities supporting forward contracts, leading to gains across the curve. Oil broke the $40 level on Brent as traders become more confident Russia will sign off on a one month extension of its cuts in the OPEC+ supply arrangement. This morning, the system is slightly long as temperatures begin to cool, and demand likely picks up. Oil continues to make gains in early trading as European equities follow on further gains in Asia, coal and German power are up and gas in both the UK and on the continent is marginally positive for both spot and curve contracts.
Thursday 4th June 2020 - Gas prices rallied yesterday, gaining strength from the spot market and powering a move in the balance of summer contracts which have been the most under pressure in this downturn. Cooler temperatures, declining LNG arrivals and a closing above a technical resistance all helped to lift the front end of the market, longer dated contracts made minor gains in sympathy with the front and the broader energy complex, but with the stall in oil on fears of an unravelling of the OPEC+ accord the lift saw some headwinds. This morning, the system is long, oil, coal German power and equities are taking a breather and making slight retracements. Gas prices are off slightly as profit taking and a risk off day across multiple asset classes influences sentiment.
Friday 5th June 2020 - Gas prices sank yesterday morning on spot weakness and concerns over the resilience of the OPEC+ output cut agreement, but by the afternoon, oil began to rebound, and gas made gains on the longer dated contracts which spread back to the front of the curve. Around the markets, oil, coal power and carbon gained while equities were down marginally, taking a breather after a 3-day rally. This morning, the system is marginally long, stock markets in Asia and equity futures in Europe and the US are all pointing higher. OPEC+ has received assurance from Iraq that it will comply with its targets paving the way for an extension of the current agreement. Gas is trading marginally higher in early trade action, while power and carbon are flat.
Monday 8th June 2020 - The gas markets joined the broader commodity complex and the wider markets in a strong risk-on Friday to close out a week of gains as equities soared in Europe and oil moved higher on and OPEC+ extension deal. This morning, the system is long 15mcm despite increasing demand as cooler temperatures and a drop in renewables lifts gas consumption. Oil continues to make gains as now WTI, US crude, joins Brent in passing the $40 mark. Equities are up in Asia, but futures are pointing lower in Europe as stock markets take a breather after rallying for almost 14 straight days. Gas is dealing slightly lower at the open, softer from the spot market across the forward curve, as coal and power also buck the trend in gains set by oil to deal lower.
Tuesday 9th June 2020 - Gas prices slipped yesterday, easing back on an oversupplied UK market and compounded by bearishness from a retracement in oil. Coal and power were also on the bearish side with carbon dropping to weigh on the latter. This morning, the system is short, stock markets in Asia are up following on gains in the US yesterday which saw the Stock market retrace all its losses from the COVID-19 induced bear market. Oil is back up in early trading and equity futures for Europe are mostly positive. Gas is dealing slightly lower in early trade action along with power and carbon shaking off the gains in the broader energy and equities markets.
Wednesday 10th June 2020 - The European power and gas markets took a bit of a beating yesterday, despite gains in oil and only minor moves in carbon and coal. The weakness in the gas market remains a keen focus for both gas and power traders as storages fill and the global glut remains entrenched. This morning the system is balanced, oil is down slightly on the back of preliminary storage data in the US suggesting a week on week increase of 8.5 million barrels, confirmation will come later today, German power is up while coal is down, and carbon is sideways. UK gas is down marginally on the spot and front month, with bids and offers tight to the previous close, no trades as of writing. Continental gas is down marginally across the curve from spot to calendar 2021.
Thursday 11th June 2020 - Gas price action was mixed yesterday, spot and some summer contracts were down while the longer dated curve contracts made marginal gains. Direction from the broader commodity complex was mixed with oil managing to move slightly higher while coal fell, carbon rose, and power moved in both directions. Concerns of a second wave of COVID-19 in the US hit equities, which have been on a steep incline since bottoming in March, casting a shadow over all markets. This morning, the system is long and there is pressure on the spot and front month contracts, coal and oil are both dealing lower along with equities and index futures which were looking a bit frothy. Both carbon and German power are down which is pulling gas contracts lower in early trade action.
Friday 12th June 2020 - Gas prices made gains yesterday on the spot and balance of summer contracts while longer dated contract floundered with the steep drop in oil. Bearishness has begun to remerge, as fears of a second wave of virus infections hit some populous US states, kicking off a wave of selling in equity markets which in turn hit oil and other commodities. This morning, the market reassesses the move, and European equities are up viewing the drop to have been a bit overdone. Oil and coal remain down, gas is dealing slightly higher despite a marginally long UK system, German power and carbon are down, highlighting the lack of clear direction for the European energy complex as trading kicks off.
Monday 15th June 2020 - Gas prices got a lift on Friday from the spot out to the end of summer contracts as demand improved on the back of low wind output and slowing increasing demand post lockdown. Across the energy markets, oil and coal also managed to make gains while power was mixed, and carbon was dealt lower. This morning, the system is balanced, oil and equities are down on concerns of a flare-up in COVID-19 cases in both the US and in China. Gas prices are up on the balance of summer contracts despite weakness in the broader energy complex, although gains are modest.
Tuesday 16th June 2020 - Mixed messages in the gas markets yesterday, gains for both the NBP and continental markets focused on the balance of summer contracts and spot prices while longer dated contracts lost equivalent value as spreads between the near and longer term prices narrow. The broader energy complex was mixed with oil gaining while coal was dealt lower, power and carbon went their separate ways. This morning, the system is slightly short, oil and coal are gaining after some positive headlines for the former, OPEC+ sees a return to normal prices soon, lift the complex.
Wednesday 17th June 2020 - Gas trading yesterday was a rollercoaster ride with a steep rise at the beginning of the day only to peak around midday before a steep drop into the close, spot and balance of summer prices closed down while the back end of the curve held gains it made with the rise in the price of oil. Across the markets yesterday, stocks, oil, coal, power and carbon gained leaving only gas to suffer a mixed day. This morning the system is balanced, stocks are making only minor gains oil is down slightly, along with German power while coal and carbon are flat in early trade action. Gas is mixed with minor support for the spot price while the curve is dealing around the close from yesterday as the market slowly gets going.
Thursday 18th June 2020 - This morning, the system is slightly long, however, modest gains in Brent crude oil, German power and carbon, are providing support for gas and early trading has contracts up slightly from yesterday's close. Headwinds in the form of weaker stock indexes and lower coal prices could weigh on gas markets today as the bulls and bears continue to fight this week for a clear direction.
Friday 19th June 2020 - It was a risk on day yesterday, with prices gaining for oil, coal, power and carbon alongside natural gas. Save for the spot, all contracts were dealt higher as traders looked to cover short positions and as the rising cost of carbon made gas more attractive relative to coal in a low renewable output environment. This morning, the system has swung long in the UK, and the spot is under pressure, by contrast German power and oil are up, carbon is sideways. Gas is trading flat to the close as the market slowly opens, and traders search for direction. Today is quadruple witching, which refers to the simultaneous expiration of single-stock options, single-stock futures, and stock-index options and stock-futures, known for brining much higher volume and volatility to markets as traders must roll a greater number of positions.
Monday 22nd June 2020 - Gas prices gained on Friday, along with oil, coal, power and carbon in a risk-on trading day to close out the week. Gains were most outstanding on the longer dated contracts which moved higher amid low liquidity, nearer term more liquid contracts gained less, bearish fundamental headwinds slowing their ascent. This morning, the system is very oversupplied as demand softens on summer holidays and supplies remain unchanged. There are only 3 LNG vessels scheduled for the UK for the balance of this month which may help slow the expanding storage levels which are set to move towards 90% in both the UK and Germany. Oil holds on to positive territory while, coal, German power, and carbon deal lower, gas is driven down by an overweight spot market in early trade action.
Tuesday 23rd June 2020 - Gas prices retraced yesterday, giving back some of last week's gains. The drawdown was mostly on the balance of summer contracts lead by a weak spot from an oversupplied UK system, seasonal contracts escaped much of the bears' wrath. Moves on the continent were more muted as strength was gleaned from oil, coal and carbon. Today,, the system is balanced, spot prices are up over a penny in early trading giving a bit of a lift to the curve. Oil is down slightly while, coal, German power and carbon are all dealing higher along with gains in stock markets as European PMIs look better than expected and a risk-on attitude returns to several markets.
Wednesday 24th June 2020 - Gas prices rallied yesterday, lifted from the front and balance of summer contracts on improving demand, while longer dated contracts gained alongside equities, coal, power and carbon, only oil lost ground on the day. As for oil, a retracement and a flat open today are coming on the back of the weekly oil numbers which traders estimate will show a small build week on week in stocks. This morning, the system is balanced, spot prices are in positive territory, while the curve is dealing flat to the close, gas has 'technically' moved out of its bear market status however, with strong supply and limited storage capacity remaining, headwinds abound. German power and carbon give back some of their gains as European equities begin trading, with losses from yesterday's close.
Thursday 25th June 2020 - Gas prices rallied yesterday with early risk on buying, lifting all contracts along with power and carbon. As the session wore on, headwinds arose as equity markets soured on the spiking cases in the US, oil reacted negatively to this and a minor build in US stock which sent Brent prices below $40/Bbl. Weakness in equities and oil spilled over to Europe and reversed the gains in gas and power sending NBP down to unchanged before closing lower late in the session. This morning, the system is slightly long, the bearish mood continues, bad COVID-19 news from the US, oil is just below $40 Bbl. and equities in Asia and Europe are dealing lower. Gas is slightly softer this morning following the broader commodity complex.
Friday 26th June 2020 - Gas prices came under pressure yesterday along with a broader market sell-off throughout the European trading day, oil, coal power and carbon were all down as well. After market close, stocks in the US got a lift taking global commodities like coal and oil back to positive territory. Today, the system is long, equities in Asia and Europe are gaining on the follow to gains in the US last night, oil is up in early trade action along with coal, German power and carbon. UK gas is trading around the close of the front month with marginal gains elsewhere on the curve, Continental gas prices are also trading around their previous closing levels. High temperatures and drought conditions in France is leading to lower water levels around nuclear facilities which could lift gas demand as cooling capacity diminishes.
Monday 29th June 2020 - NBP gas managed to finish the previous week up, with minor gains on Friday, moving higher with coal, power and a weaker pound. Continental gas was mixed as the euro gained and carbon fell, oil was sideways after struggling throughout the week and posting a loss on fears of falling demand related to COVID-19 flare-ups in the US, This morning, the system is long, despite cooler weather, coal is flat, carbon is slightly up while oil is slightly down leaving gas stranded without directions trading thigh to the previous close in low, early morning, volume. Outside of the energy markets equities are down in Asia and Europe while equity futures are marginally positive for the US, coronavirus outbreaks in the US and handful of flare-ups in Europe, Switzerland and Germany, show that a return to normal will require a vaccine.
Tuesday 30th June 2020 - UK gas prices rallied yesterday along with the European energy complex and the broader global commodity and equity markets. Large gains in carbon lifted power and gave support to gas a cheaper/cleaner fuel over coal, while a rally in US gas prices after the bankruptcy of a shale gas major lifted LNG prices globally, support European gas markets. Coal, oil and German power all made gains along with equities across the globe as the market's risk on attitude came back from a bearish prior week. This morning, the system is marginally short as cooler weather returns and demand increases. Big gainers have eased back this morning, oil, coal and carbon are all return some of their gains while German power is dealing higher, gas is trading flat tot the previous close on both near and longer term contracts.
Market Comments July
Wednesday 1st July 2020 - UK gas prices rallied with the expiry of both the July and Q3 contracts increasing by over a penny in intraday day trading, continental gas and coal rallied alongside the UK, power and carbon were also higher. In the last hour of trading buying interest evaporated and prices retraced and then tumbled back to the previous close leaving most contracts unchanged. Today, the market opens a touch softer on the spot while the curves are unchanged, the system is balanced, coal is flat, German power and carbon are down. Oil is up on expectations that weekly inventory numbers will show a large draw in US stockpiles, a signal the global glut continues to ease.
Thursday 2nd July 2020 - Gas prices rose and fell yesterday, unable to sustain gain made over most of the day a sell-off ensued near the close, coal and power followed gas while oil and emissions made and held their gains. This morning, the system is long, oil and equities/futures are in positive territory as some positive coronavirus news is circulating, regarding improved drug trials. In European energy markets, coal, German power and carbon are all dealing lower in early trading, gas is sideways with minor losses on the continental hubs while the UK has a minor gain in the first handful of trades. Volumes are generally good so far, this summer, but liquidity is starting to drop as summer holidays pick up.
Friday 3rd July 2020 - Strong renewable generation forecast for the weekend and coming week send prices down for the balance of the month and the front month contract. The wind output in both the UK and the continent will reach extreme levels this weekend and gas generation will be pushed out of the stack for most hours. Prices will find support from low LNG send-out and low numbers of cargo arrivals in NW-Europe and also from the upcoming maintenance of the Nordstream pipeline, which brings 155 MCM/d of gas to Europe. Prices on the curve traded mostly sideways yesterday. This morning, the first prints come in lower with NBP Win-20 exchanging hands at 33.00 p/th.
Monday 6th July 2020 - Gas prices rose on Friday, despite weakness in the broader energy complex save for carbon credits, which helped raise the value of gas over coal for power production. Oil, coal and most power contracts were dealt lower into the end of the week, as equites markets were clouded by the rising COVID-19 caseloads worldwide. This morning, the system in long as demand dips and supplies pick up from both Norway and LNG send outs. Despite the oversupplied market, gas prices are up as the broader energy complex is on a tear from the open, both oil and coal are up a dollar, while German power and carbon contracts have gained over a euro. Gas is trading just under a penny higher on the front month, while continental gas prices are higher by 30 cents, strong risk on sentiment from the equities markets is lifting all boats.
Tuesday 7th July 2020 - Gas prices rallied yesterday in the UK and gained on the continent, lifted with the broader energy complex, coal and oil, coupled with power and carbon. A strong performance in global equities added to positive sentiment, particularly for carbon which is rapidly approaching 30EUR/Ton. This morning, the system is balanced, oil is dealing slightly lower while coal and German power are flat to slightly higher. As prices have begun to rise, LNG imports and send-out have begun to increase keeping gas moves more subdued than moves in markets like power and carbon which are perceived as tighter. A pull back in equities this morning, signals a cooling off from the recent rally or a time for consolidation ahead of earnings which will come out in the coming weeks.
Wednesday 8th July 2020 - Today, the system is long and the weather forecasts have been revised cooler. Storage injections have slowed on the back of reduced injection capacity and a modest uptick in demand as European economies expand their reopening's.
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