Pricewatch l 2 May 2024 I Gas Matters Today

Crude oil prices plummeted on Wednesday amid growing hopes of a ceasefire in Gaza and the latest data on US oil inventories, which showed a build rather than a withdrawal. Brent crude was down 5.0% to USD 83.44/barrel while WTI closed down 3.6% at USD 79.00/barrel. Both bounced back by around a percentage point early on Thursday morning.

Traders were also scrutinising the latest insights into US policy on interest rates for the coming year – not least because of the influence that Federal Reserve decisions exert on other central banks. Rate cuts look much less likely than they did a couple of months ago as the Federal Open Market Committee (FOMC) doubles down on a target of 2% inflation.

The committee decided to hold rates where they are, and markets briefly rallied when Federal Reserve chair Jerome Powell said in his post-meeting press conference that a further rate hike was unlikely. However, they slumped as he insisted that 2% remained the target for inflation and that cuts remained subject to achieving that.

Asked about concerns that persistent high interest rates could lead to stagflation, Powell pointed to growth, jobs and inflation numbers and drew a laugh from reporters when he added that he saw “no stag and no flation”.

Yesterday’s weekly petroleum status report from the Energy Information Administration (EIA) took the market by surprise, indicating a week-on-week build in commercial inventories of 7.3 million barrels when a withdrawal was anticipated.

US natural gas slumped, with front-month Henry Hub down 3.0%, from USD 1.99/MMBtu on Tuesday to USD 1.93/MMBtu on Wednesday. Comfortable weather is constraining demand while production is now around 97 Bcf/d, significantly down on levels of more than 100 Bcf/d earlier in the year.

Weeks of student protest in the US over the war in Gaza have turned violent in a dramatic escalation, throwing an ever-brighter spotlight on how unrest might affect the November presidential election. Around 300 students were arrested by NYPD officers in New York while protestors clashed with counter-protestors in California and police broke up a protest camp in Texas. More than 30 educational establishments across the country are now affected.

European gas futures continued to see-saw, with TTF down 1.1% to USD 9.03/MMBtu and NBP down 1.8% to USD 8.77/MMBtu. The sawtooth price pattern continued on Thursday morning with both prices on upwards trajectories.

In Asia, the JKM LNG price was down 1.0%, from USD 10.34/MMBtu on Tuesday to USD 10.24/MMBtu on Wednesday, with the TTF-JKM spread unchanged at USD 1.21/MMBtu.

Coal prices bucked the downward trend, with the API2 European benchmark up 4.1%, from USD 4.12/MMBtu on Tuesday to USD 4.28/MMBtu on Wednesday.

Front-month futures and indexes at last close with day-on-day changes (click to enlarge):

Time references based on London GMT. Brent, WTI, NBP, TTF and EU CO2 data from ICE. Henry Hub, JKM and API2 data from CME. Prices in USD/MMBtu based on exchange rates at last market close. All monetary values rounded to nearest whole cent/penny. Text and graphic copyright © Gas Strategies, all rights.