Weekly Market Update - Disruption at Australian LNG facilities and cancellation of Freeport LNG cargoes dominate news

Head of Sales Trading, Fanos Shiamishis, reports on energy market activity, covering the period 12th September – 18th September 2023. On our end-of-day pricing tool, The Source, we published an in-week high of £115.31/MWh for the Winter-23 seasonal power price on 13th September. In this blog, Fanos shares the market news and updates from the last week.

Early last week, European gas prices fell on the back of outages ending at the Troll gas field in Norway and high gas storage, which offset the impact of the LNG strikes in Australia. On the UK power curve, the most liquid contract was the October-23 baseload, trading a total of 407MW, and the N2EX day ahead base closed £6/MWh lower as wind generation began to pick up.

Mid-week, Norwegian nominations increased, and the UK gas system opened 5mcm oversupplied. Flows and LNG shipments into the UK were stable, with only the Australian LNG workers impasse dominating the news. However, additional news arose of subdued gas flows from the US gas terminal, Freeport, adding further risk to the front winter outlook, with no indication to the market when they are due to recover. Also, China restarted spot LNG purchasing, which may also cause issues for European buyers in the long term.

Despite this news, both NBP and TTF declined amid weaker demand, and towards the end of the week, Winter-23 Spark spreads softened, with power gaining at a slower rate to NBP. Trading on October power was sporadic, with the scarcity adding support on the buy side, with markets picking up anything available across Winter-23 months, quarters and seasons. Buyer patience waned in the final hour of Friday, with bids increasing for Winter-23 by up to £1 on the morning's offered price.

The markets faced a challenging weekend of news following a statement released on Friday by the Australian workers union, the "Offshore Alliance", announcing a faltering contingency workforce at Chevron LNG platforms. However, yesterday morning, European markets opened to news of strong supplies at Australian LNG terminals, with loading at around 80% flow rate, and responded assuredly to the news, with October-23 TTF losing roughly 6.6% on price and NBP Winter down around 5%.