Last Friday, gas prices saw small increases, supported by bullish oil futures and reduced supply from Norway. Most curve contracts saw small gains of around 0.4p/therm (0.014p/kWh), proving the market is relatively stable. A spike in oil prices most likely provided backing for market increases. The positive US economic sentiment boosted the Brent Crude benchmark contract, which rose from 2.3% to $79.02.
What does this mean?
Industry stakeholders will now be looking at maintenance in Norway. Offshore operator Gassco claims offline capacity will increase from 34.4 million cubic meters (mcm) on Tuesday to 136.46 mcm by Friday.
Also, the UK’s Easington terminal will have a shutdown that lasts a fortnight at the start of September. The terminal’s second maintenance of the year will cut 72.7 million cubic meters (mcm) of capacity, significantly reducing pipeline exports to the UK.
Despite this, UK and EU storage levels are likely capping gas prices, with Britain’s storage reaching 94.7% capacity. This marks an increase of 18% higher than this time last year.
Following last week’s Ukrainian attack on Sudzha, the weekend brought reports of new Russian attacks on Ukraine’s energy infrastructure. Over 100 drones and missiles were reportedly launched from Sunday evening into Monday morning.
Summary
As of Tuesday morning, the Winter 24 contract is trading at 1.75p/therm (0.06p/kWh) higher than its previous close. The market’s rise is due to rising oil prices, reduced Norwegian supply, and upcoming UK power plant maintenance. Russia’s recent attack on Ukraine will create tensions in the energy market which may affect prices. However, high gas storage levels in the UK and Europe are helping to keep gas prices contained for now.
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