Tom Haddon
@tomh-analyst
17 years as an energy market analyst, now working on asset transactions and investment advice across the energy industry. All views are my own. More background:
Happening in Europe too, but look at US refiners who are shipping tonnes of jet fuel and diesel to Europe:
And there we have it. If it closed here, it would constitute a multi-year high for gas prices.
And it's simply because, despite the loss of Qatari volumes pushing it all back, the LNG oversupply is real and out there. Just hidden at this moment behind a shroud of missiles and bellicose nonsense.
Looking East you see strong H1'26 Asian demand for LNG. Looking West you see US Nat Gas to LNG unable to maintain volumes since April. Bit of a pincer movement on the European gas market, providing the foundation for the high prices.
NBP front month gas also up 3% to....dun dun duuuuuhhh...149p/th. This means it is now exactly at the peak of the crisis, again/for now (take your pick).
Crude back above $90bbl. Hormuz ships not shipping. Going to have to start watching diesel prices again.
The upshot is: it's a function of being mid-transition. Plenty of changes are being made to transmission, and also investment is ploughing into the things that played a massive role in stemming the problem for a number of hours; BESS. Next year, repeat the scenario and probably nothing happens.
But broadly speaking, NESO ended up in a mess due to maintenance schedules, North/South constraints, and interconnector actions and their geography (in the South East), layer on a dose of not being as aligned to the EU's IEM and we have a Brexit shaped market design problem:
There will be distributed energy/renewables narrative trying to emerge (the likely lads are trying to portray this as a Spain version two) but it's clearly nonsense. Wind output forecast missed by ~2 GW (room for improvement there I think!), but solar PV and BESS nailed the brief.
June is peak maintenance season for basically everyone (except solar PV for obvious reasons) so you get plant not available, you get plant tripping (due to heat) and you get your transmission system/boundaries constrained further due to heat effects. All in all - an 'unforeseen' omnicrunch
European (German in this case) refining margins remain on a tear. Crude isn't that hard to come by for active refiners, but a hell of a lot of refinery capacity is stuck behind barriers or has been directly attacked. So the oil product impacts that were visible from space from day one continue.
After a relatively calm day yesterday with a ~1% move, prices have come to play again, up about 4% this morning to 138p/th. Closing in on the previous Iranian peak now (August contract, i.e. front month).
But then again, called this one absolutely on the nose. Not that it seems to be spreading much into Western markets (yet).
Another week another quite hefty draw on the US SPR of close to 1mbbl/d (6.2mbbl) ...but countered by crude stocks being fairly resilient elsewhere. ...but countered back again by gasoline still drawing (as before, probably seasonal) Overall, price signals don't seem to care that much.
Still appears to be running maybe 20 transits a day (each way) vs 60 pre-conflict. So stuck at 30%ish of volume. But crude oil prices couldn't care less, which seems inherently weird to me. C/O @roryjohnston.bsky.social
Update. I would show this to half the Conservative party, but unfortunately they are now being turned into sunlight via nuclear fusion due to past launches.
It took a while, but looks like through May and June, Norwegian gas flows to Europe were materially higher than last year, by about 30-40msm3 per day (roughly 10% higher).
European gas prices going for a mini-rip (~4%) this morning because of a story in three parts: 1) US -> Asia LNG traffic is up (that's your background scene) 2) An LNG carrier got struck overnight 3) LNG cargoes now turning back in the Strait All c/o @sstapczynski.bsky.social
Update on the Iranian conflict not being a European gas crisis: Global LNG supply *expanded* year-on-year in June. Aside from the European angle, adds to the narrative that for US LNG exporters especially, the return of Qatari et al volumes is going to cause problems.
As one of the more visible SPRs / stocks picture, The EIA data for US crude and product stocks is still showing pretty heavy draws (despite a week on week fall in exports) for crude (5.5 mbbl) and gasoline (2.3 mbbl) - seasonal effects here (driving season, 4th July etc) but one to watch:
He may have initially bucked the trend, but the heart doctor caught up with him eventually!
Strategy might kick off a forced-selling spiral...on itself. If it has to start selling bitcoin to finance itself, which then causes the price of bitcoin to fall faster, requiring it to sell more, how hard would you laugh given the company's name is Strategy?
As ever, have no idea if this accounts for any dark transits, but the post below still seems like a distinct possibility (even accounting for rerouting via pipeline). Crude prices are not reacting at all, so now I guess all eyes turn to SPR / stockpile data where we can get it to track the risk.
Prices are not even that extreme - was very close to the £1/kWh cap on Wednesday if I remember correctly. All very strange for why an EMN is active.