Pricewatch l 30 April 2024 I Gas Matters Today

Ministers from the G7 countries have reached agreement to phase out coal from their economies in the first half of the next decade, according to reports from the major news agencies.

European coal futures plunged, with the May API2 contract – now the front month – closing at USD 4.05/MMBtu, down 4.7% on its Friday close. The April contract expired on Friday at USD 4.72/MMBtu, so the front-month price is down 14.2%.

The UK minister attending the meeting, Andrew Bowie, yesterday confirmed in an interview with Class CNBC that agreement had been reached. He added that a commitment by the world’s most advanced economies to phase out coal by the early 2030s would be an “historic agreement – something that we weren’t able to achieve at COP 28 in Dubai last year”.

A final communique from the G7 members – US, the UK, Germany, France, Canada, Japan and Italy – is expected later on Tuesday, when the meeting being held in Italian city of Turin concludes.

In the US, month-ahead Henry Hub closed above USD 2/MMBtu for the first time since early February as the May contract expired on Friday – at USD 1.61/MMBtu –and June became the front month, closing at USD 2.03/MMBtu on Monday.

Bullish factors include the re-start of a liquefaction train at the troubled Freeport LNG export plant and planned and unforeseen supply outages in the Permian Basin.  Pipeline operator Kinder Morgan declared force majeure on Friday on a section of pipeline in Texas, following a fire that burned for hours before being extinguished. The outage will affect supply to some parts of Texas until further notice.

Traders are also anticipating a weak storage injection in government data to be published later this week.

European gas futures continued to slide, with TTF closing down 2.8% at USD 8.80/MMBtu and NBP down 3.8% to USD 8.62/MMBtu. Both prices were moving upwards on Tuesday morning.

In Asia, JKM was down for the third consecutive session, to USD 10.21/MMBtu, despite reports that a severe heat wave in South-East Asia is boosting cooling demand and prompting additional LNG purchases.

The Philippines and Thailand have seen record temperatures, with power systems struggling to cope with demand. Myanmar and Vietnam are also feeling the heat, with some cities facing power outages.

Crude oil prices fell amid tentative expectations of a ceasefire and hostage release agreement in Gaza. Brent was down 1.2% to USD 88.40/MMBtu while WTI fell 1.5% to USD 82.63/MMBtu.

Intensifying protests at university campuses in the US over the Israel-Gaza war are causing some commentators to draw parallels with the Vietnam protests of the late 1960s that played a role in Richard Nixon’s election as a Republican president.

There is speculation that the current protests could start to impact the Democrats’ chances in the forthcoming presidential election in November. Donald Trump remains the favourite to win, narrowly ahead of Joe Biden, despite his legal travails.

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.