Yesterday we welcomed the new gas year and delivery period for Winter24. However, it certainly wasn’t a quiet day; prices initially softened as weak demand and strong gas storage levels limited gains. UK and European benchmark contracts gained over 10% since last week highlighting that the market remains prone to volatility as we enter the heating season. For now, gas storage levels are almost 95% full and demand remains muted on the back of subdued economic momentum. Flows from Norway are recovering after maintenance, which will help increases in demand. Temperatures across parts of Europe and UK are set to turn colder than usual this month, coinciding with the arrival of La Niña. However, it was once again news from the Middle East which sent prices higher by yesterdays close. The U.S. received indications Iran was preparing to launch a ballistic missile attack against Israel, which were proved to be true. Iran fired over 180 missiles on Israel, escalating the situation in the Middle East. Traders have been on alert for possible supply disruptions since the escalations started. From a gas perspective any disruption to Egyptian supplies via Israel through the Arab Gas Pipeline could bring them into direct competition with Europe over spot LNG cargoes. Oil prices have gained almost 5% since Mondays close. Whilst gas fundamentals look stable for the time being, continued geopolitical concerns will provide upside risk limiting price losses.
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