European natural gas prices jumped on Tuesday amid reports that Russia’s latest onslaught on Ukrainian energy infrastructure has damaged underground storage and ahead of planned maintenance in Norway that will impact its gas exports to Europe.
In continental Europe, the September TTF contract – which expires tomorrow – was up 3.0%, from USD 12.32/MMBtu on Monday to USD 12.68/MMBtu. It was the third consecutive rise and the price was moving further upwards on Wednesday morning.
In the UK, the September NBP contract – which also expires tomorrow – was up 5.6%, from USD 11.71/MMBtu on Friday to USD 12.36/MMBtu on Tuesday; markets were closed on Monday for a public holiday.
The impact of high energy prices on the poorest households, especially pensioners, continues to dominate the headlines in the UK. Energy suppliers will today meet with a government minister to discuss what extra help may be needed this coming winter.
Meanwhile, an independent advisory board sponsored by the Department for Energy Security and Net Zero today warns that 13% of households are in fuel poverty, meaning they cannot afford to adequately heat their homes.
The Chair of the Committee on Fuel Poverty, Caroline Flint, said: “For too many low-income households, the unaffordability of bills, especially in the coldest months, is all too real. We foresee that targeted financial support, possibly including the use of social tariffs, for vulnerable and low-income households may be needed for some years to come.”
In the US, the September Henry Hub contract, which expires today, continued to slide, down 2.7% to USD 1.90/MMBtu. The key driver appears to be the expectation of tepid demand as summer gives way to the autumn shoulder season.
The October contract, which becomes the front month tomorrow, remains above the USD 2/MMBtu threshold, settling at USD 2.09/MMBtu on Tuesday, providing some comfort to producers.
In Asia, the JKM LNG benchmark rose by 1.7% to USD 14.06/MMBtu, a continuation of the divergence of gas prices in the world’s three main consuming regions that characterised markets on Monday.
READ Lack of investment casts uncertainty over future gas supply - IGU
The International Gas Union (IGU) warned that underinvestment in gas and clean energy are jeopardising global energy supply in the face of rising demand.
In its 2024 Global Gas Report, the IGU says: “Should gas demand continue to grow as in the last four years, without additional production development a 22% global supply shortfall is expected by 2030. If demand continues to strengthen, the shortfall will be more pronounced. This underscores the urgent need to scale up investments.”
To close the gap between current and targeted CCUS (carbon capture utilisation and storage) capacity levels, the IGU calls for greater collaboration between governments and industry “to lower the risk of project delays and increase project bankability”.
Crude oil prices yesterday reversed most of the sharp gains they made on Monday, despite reports of a supply outage in Libya, following the declaration of a nationwide force majeure, and news that the Greek oil tanker on fire in the Red Sea has begun leaking oil.
Brent fell by 2.3%, from USD 81.43/barrel on Monday to USD 79.55/barrel on Tuesday, while WTI was down 2.4%, from USD 77.42/barrel to USD 75.53/barrel.
Both were down again, by more than a percentage point, in early trading on Wednesday.
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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.
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