This Monday, natural gas prices at the National Balancing Point (NBP) fluctuated. The factor responsible for this direction was the reduced Norwegian gas flows. However, ongoing high storage levels in Europe and declining oil prices may have capped this market increase. The day-ahead contract surged by 9.5p/therm (0.32p/kWh), marking the largest price movement at the front end of the market.
What does this mean?
This week, gas flows from Norway faced constraints due to an outage. Norway’s Gullfaks C platform saw a 22.4% decrease in gas flows on Monday compared to last Friday’s gas day because of an unplanned outage. Equinor reported that it had to evacuate workers due to a “well control incident”. By Tuesday morning, the issue had been fixed.
The oil and coal markets saw declines in future contracts. Data from ICE showed the benchmark for Brent Crude had dropped 2.5% as a result of Chinese demand being unexpectedly low. This factor combined with rumours that Israel had accepted a US proposal for a ceasefire between Israel and Hamas’ had a bearish impact on the market.
Summary
As of Tuesday morning, gas prices opened in negative territory. The Winter 2024 front-season contract is being offered around 1p/therm (0.034p/kWh) below its previous settlement. The market has likely declined because gas storage levels in Europe remain high, reducing the pressure on suppliers to purchase energy during a bearish period. On top of this, the oil and coal markets have declined recently, which affects the global energy market.
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