Commodities
Current situation on the gas market: a gas war breaks out in the world
There is discord in Europe: some countries urgently want to reconcile with Russia; others want to buy gas from Nigeria. All this has a strong impact on the European gas market.
Natural gas market news – market situation
The European gas market has been shaking for many months now, but as we approach autumn the panic is getting worse. While Russia is sorting out problems with the delivery of the turbine for Nord Stream, the EU countries are actively looking for an opportunity to fill their storage facilities and at the same time convince their citizens that they should heat their apartments less in winter. And while citizens will be left with no alternative, the industrial enterprises still need energy to operate.
Against this background, European politicians are actively looking for a way out of the situation they have created. They realize that they will not be able to reduce gas consumption. This is the opinion of a lot of countries, which demand preferences and do not want to meet the requirements of the EU authorities to voluntarily reduce gas consumption by 15%. According to the Financial Times, it is necessary to cancel such a requirement for at least five countries of the bloc.
Most countries of the European Union have already begun to save money on everything. In France, they are intensifying measures to save electricity – they will restrict light advertising and prohibit stores with air conditioners to keep their doors open, said Minister of Energy Transformation Agnès Pannier-Runache.
All new proposals to diversify supplies, even the most exotic ones, are in circulation. For example, Matthew Baldwin, deputy director general of the European Commission’s energy department, said that the EU is looking to arrange additional gas supplies from Nigeria. Baldwin said that the EU imports 14% of its total LNG supplies from Nigeria, and there is the potential to more than double this figure.
Oil and gas production in Nigeria is limited by theft and pipeline vandalism, leaving the terminal of gas producer Nigeria LNG Ltd. on Bonny Island operating at 60% capacity. But if supplies rise to at least 80 percent, it will make Europe feel more secure.
Hot and cold weather will continue to weigh on the natural gas market
Gas market prices in Europe rose to $1,700 per 1,000 cubic meters last week. The Nord Stream 1 pipeline is up, and running, but it is pumping about 40 percent of its operating capacity, roughly the same as before the shutdown for maintenance. The Siemens turbine has not yet arrived in Russia, which leaves some risk of further low pumping.
Europe’s UGS capacity was 66.24% as of July 23, increasing by 3.7% over the week. EU members oppose the EU’s demand for a 15% reduction in gas consumption. Germany raised its gas storage target to 95% for the Nov. 1 state.
In the US, the Henry Hub (CME futures) gas price continued to rise to $8.299/mmbtu ($297 per 1,000 cubic meters) amid a supply shortfall due to accidents, seasonally higher consumption and high export demand. Natural gas inventories in U.S. natural gas storage facilities continued to grow, but the rate of growth slowed significantly due to rising consumption. On a year-over-year basis, storage inventories as of July 15 remained 10.1% below year-ago levels and 12.09% below the level of the past five years.
The price of natural gas in Asia on a JKM basis fell slightly to $38.09/mmBTU, or $1,460 per 1,000 cubic meters. Japanese and Taiwanese buyers are once again entering the spot natural gas market with purchases for the coming winter. Japan’s LNG imports for the first six months of 2022 were 3.5% lower than in the same period in 2021. China has also reduced purchases due to coronavirus restrictions.
The oil and gas markets will remain tight in the near term. Prices will directly depend on the supply situation, but they are not expected to ease any time soon. Demand will continue to rise with the coming hottest summer month (August), and gas pumping into storage facilities will increase pressure on the market.
Pressure from both sides will stabilize the price
The European gas market showed a slight increase on Monday, from $1,690 to 1715 per 1000 cubic meters. It continues the recent technical correction after a slight drop from $1,900 to $1,500 at the start of last week.
The natural gas market price is under pressure from opposing strong factors. Its marked “descent” for energy carriers after the June panic is connected not only with the current conjuncture, but also with the growing fears of the impending recession in Europe and the USA. At the same time, high inflation (8.6% in the eurozone and 9.1% in the United States) and higher central bank interest rates are hindering economic growth.
The eurozone is in a tricky situation, with prices rising from 8.6% to 8.7%. This could be perceived as an increase in inflationary expectations, which would also affect the growth of gas prices. Its price, by the way, is also supported by previous fears of a physical shortage of gas for autumn-winter in Europe due to insufficient supplies.
Thus, the combination of multidirectional, strong and little predictable drivers of gas quotations will keep them in the same established range of $1,500-1,900 this week.
By Laila Kearney and Georgina McCartney
LONDON (Reuters) -Oil prices slipped on Friday and were on track for a third consecutive weekly decline, pressured by muted demand in China and hopes of a Gaza ceasefire deal that could ease Middle East tensions and accompanying supply concerns.
futures for September dipped 56 cents to $81.81 a barrel by 1250 GMT. U.S. West Texas Intermediate crude for September fell 40 cents to $77.88.
For the week, Brent is trading down almost 1% while WTI is down more than 2%.
Recent data, such as July 20 figures showing that China’s total fuel oil imports dropped 11% in the first half of 2024, have raised concern about the wider demand outlook in China.
In the Middle East, hopes of a ceasefire in Gaza have been gaining momentum.
A ceasefire has been the subject of negotiations for months, but U.S. officials believe the parties are closer than ever to an agreement for a six-week ceasefire in exchange for the release by Hamas of female, sick, elderly and wounded hostages.
Oil price declines were capped, however, by threats to production from Canadian wildfires, a large stocks draw and continued hopes of a September cut to U.S. interest rates after strong economic data, said PVM oil analyst Tamas Varga.
Investing.com– Oil prices fell Friday, on course for a third consecutive losing week as concerns over sluggish demand conditions in Asia weighed.
At 09:00 ET (13:00 GMT), fell 0.9% to $81.62 a barrel, and dropped 0.8% to $77.66 a barrel.
Crude set for third straight week of losses
Both benchmarks are on course for another losing week, the third in succession, with down just under 1% and WTI nearly 3% lower.
Persistent concerns over slowing growth and demand in top importer China have been the dominant factor, part triggered by GDP data from last week, which showed the Chinese economy grew less than expected in the second quarter.
Additionally, more data this week showed the country’s apparent oil demand fell 8.1% to 13.66 million barrels per day in June.
Beijing unexpectedly cut a swathe of lending rates this week, further trying to loosen monetary policy amid growing concerns over sluggish growth.
Apart from China, uncertainty over Japan also grew following middling , while weak activity data in Europe also pointed to economic woes.
Gaza ceasefire in focus
Also weighing on the crude market have been increasing hopes of a ceasefire in Gaza.
The leaders of Australia, New Zealand and Canada called for an immediate ceasefire in a joint statement on Friday, while U.S. Vice President Kamala Harris has pressed Israeli Prime Minister Benjamin Netanyahu to help efforts at reaching a deal, striking a tougher tone than President Joe Biden.
A ceasefire has been talked about for months, but if it was to occur then some of the risk premium could be removed from the market.
Strong US GDP, rate cut hopes offer some support
On the flip side, data, released on Thursday, showed that the U.S. economy grew more than expected in the second quarter, despite pressure from high rates and relatively sticky inflation.
The reading drove up hopes that the world’s biggest fuel consumer was headed for a “soft landing,” where economic growth remained steady while inflation eased.
These hopes were also lifted by the data showing overall U.S. inflation cooled as expected in June.
According to data from the Bureau of Economic Analysis, the (PCE) price index slipped to 2.5% in June, from 2.6% the prior month. .
Stripping out volatile items like food and fuel, the year-on-year “core” gauge, widely known as the Fed’s preferred gauge of inflation, remained at 2.6%, only marginally above the Federal Reserve’s 2% target.
This sparked increased optimism over a potential interest rate cut by the Federal Reserve in September.
Data showing steady drawdowns in U.S. also offered some positive cues to oil markets, as fuel demand in the country remained robust amid the travel-heavy summer season.
(Ambar Warrick contributed to this article.)
(Reuters) -A wildfire reached the Canadian town of Jasper, Alberta on Wednesday, one of hundreds ravaging the western provinces of Alberta and British Columbia, as firefighters battled to save key facilities such as the Trans Mountain Pipeline, authorities said.
Wildfires burning uncontrolled across the region include 433 in British Columbia and 176 in Alberta, more than a dozen of them in the area of Fort McMurray, an oil sands hub.
The pipeline, which can carry 890,000 barrels per day (bpd) of oil from Edmonton to Vancouver, runs through a national park in the Canadian Rockies near the picturesque tourist town, from which about 25,000 people were forced to evacuate on Tuesday.
“Firefighters … are working to save as many structures as possible and protect critical infrastructure, including the wastewater treatment plant, communications facilities, the Trans Mountain Pipeline,” Parks Canada said in a post on Facebook (NASDAQ:).
The pipeline operator did not immediately respond to a Reuters request for comment, but said earlier it was safely operating the pipeline and had deployed sprinkler protection as a preventive measure.
In the day’s last update, Jasper National Park said it could not report on the extent of damage to specific locations or neighbourhoods, and that it would provide further updates on Thursday.
Canadian Prime Minister Justin Trudeau said his government approved Alberta’s request for federal assistance.
“We’re deploying Canadian Armed Forces resources, evacuations support, and more emergency wildfire resources to the province immediately – and we’re coordinating firefighting and airlift assistance. Alberta, we’re with you.”
The town, and the park, which draws more than two million tourists a year, were evacuated on Monday night, at a time when officials estimated there were 15,000 visitors in the park.
Deteriorating air quality forced firefighters and others lacking breathing equipment to evacuate to the town of Hinton, about 100 km (62 miles) away, park authorities said on Facebook on Wednesday evening.
Officials of Parks Canada earlier said they expected rain to arrive overnight.
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