Prices retrace as LNG send out meets higher weather related demand

NBP Gas prices retraced some of the steep gains made on Wednesday, with LNG supply primed to meet higher weather-related demand.

Significant losses were posted across most curve contracts, with those at the front-end softening by circa 3p/therm (0.10p/kWh) when compared to the previous close. On the LNG front, the latest shipping signals indicate that up to seven vessels could arrive at British terminals over the next seven days. Of these, six are laden with US volumes, highlighting continued American dominance of the European LNG spot market.

Consistently high send out is expected to persist over the coming days, helping to offset unseasonably high demand, which, according to our 14-day model, is set to continue until March 19th.

Global commodity markets continue to closely monitor developments in the Russia-Ukraine war, with the US expected to deliver Ukraine’s terms for a 30-day ceasefire to the Kremlin in the coming days. The outcome of these talks could have significant implications for energy markets, as a ceasefire may stabilize supply routes and reduce geopolitical risk premiums.

Despite yesterday’s bearish sentiment, the market has been unable to sustain further downside this morning.

According to ICE data the Summer 25 front-season contract is now being offered at a premium of approximately 2p/therm (0.07p/kWh) when compared to its previous settlement, as the market continues to fluctuate within a relatively narrow range.

Gas prices opened on a positive note in the morning following reports of a significant Ukrainian drone strike on Russia’s Moscow region overnight.

From there, key contracts softened slightly after comments from the head of Ukraine’s presidential office indicated that ceasefire negotiations between US and Ukrainian diplomats in Jeddah had ‘started very constructively’.

Uncertainty seemingly got the better of market sentiment later in the afternoon however, with the Summer 25 front-season contract posting daily substantial gains of 5p/therm (0.17p/kWh) by the end of the day.

Yesterday evening, it was confirmed that the talks in Saudi Arabia had been successful, with the US and Ukraine agreeing on an undisclosed 30-day ceasefire proposal.

It’s understood that the US will promptly present this to Russia on Ukraine’s behalf, but it remains unknown if the proposal, in its current state, will be deemed acceptable by the Kremlin.

This morning, although the NBP had initially opened very much in line with yesterdays close, key contracts are now being offered at a slight discount when compared to their previous settlement, at time of writing.

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Price commentary courtesy of Crown Gas and Power