Gas market – coal, oil and carbon prices dropped last week, and combined with the mild weather, this sent gas lower also
The entire energy market declined last week – including the gas price.
With a drop of over USD 2/barrel for oil and almost USD 4/tonne for coal, two of the key inputs from the rest of the fossil fuel market were weak last week, helping to push gas lower.
The weather is also generally mild in Europe and the supply balance good at the moment, adding further downward pressure on the gas price.
A final factor that helped push gas lower last week was LNG (liquefied natural gas). We’ve previously mentioned the lack of LNG deliveries to Europe over the summer. But this situation has changed over the last few weeks, and many ships have arrived in Europe carrying LNG. This has also meant that the LNG storage facilities are almost full. As each ship arrives, the receiving terminals essentially have to release the gas into the grid, as there isn’t much available storage capacity for LNG. We’ve therefore seen falling gas prices at the front, where the combination of mild weather and plentiful supplies have pushed prices lower.
It’s not only the LNG storage facilities that look healthier. The conventional gas storage facilities have also seen a marked improvement over the past month. They are still lower than in previous years, but the shortfall has narrowed, and the risk for the coming winter is considerably reduced. We’ve therefore seen gas prices for the front contracts fall markedly of late.
This week opened with slightly colder weather across Europe, but not strictly cold as such. We’ve also seen coal and oil a little higher than last week. Although the carbon price has dropped significantly, this hasn’t fully offset the bullish inputs from coal and oil, and gas has been up slightly from the start of the week.
Bullish mood: The market focuses on factors that can make the price go up.
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