After a slow start this morning (4th July 2022), the news of strikes to the Norwegian energy sector, due to take place on Wednesday this week, sent prices for August 22 increasing considerably for both gas and power. We saw gas rise by up to 20% at one stage before the market dropped but we still expect to see double digit percentage increases for gas and power today.
Further out in the curve, prices also increased for both power and gas, but final prices are expected to be approximately 5% up on Friday’s close.
August 22 wholesale gas prices gas prices dropped by 3% to close at 240.94 pence per therm.
August 22 wholesale power prices also dropped by 1.7% to close at £232.53 per MWh.
In other energy related news:
- Although the flows of gas coming into Europe have been stable for the last three weeks, there is an expectation that the upcoming strike by oil and gas workers in Norway, could reduce Norwegian gas flows by approximately 13%. The markets wait in anticipation to see if last minute negotiations will prevent the strike from taking place, which cannot have come at a worse time given the impact it has had on wholesale prices today.
- Reports suggest that the Italian government will be loaning 4 billion Euros to the state-owned energy company GSE to buy gas in preparation for what could be a difficult Winter. With the reduction in Russian gas since early June, Italy is preparing for potential further gas reductions. Other big importers of Russian gas, e.g. Germany and Austria, are warning customers way ahead of the coming Winter that there could be a need to apply gas rationing measures should the current situation worsen.
- Following the fire at the Freeport LNG facility in Texas on 8th June, LNG imports from the US to Europe dropped to the lowest levels for 4 months. 90 LNG cargoes set off from the US last month with just over 60% of these making their way to Europe. The US regulator has warned the Freeport owners that they will not be allowed to resume operations until all public safety issues have been addressed. The latest view is that partial operations should resume in October, but it is unlikely that Freeport will be fully functional before the end of this year.
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