The bullish momentum continues this week, highlighting volatility in the energy market is still at the forefront. Earlier in the year the market hit lows not seen since 2021 however since then various issues has caused the market to reevaluate their positions. EU storage levels are at 23% high compared to the 5-year average which has helped to keep a lid on prices, however with our reliance on global markets since 2022, the market is continuing to price in risk from possible supply disruptions. Last week the market pushed higher on concerns regarding Russian attacks on Ukrainian energy infrastructure whilst this week the threat of escalation in the Middle East combined with unplanned outages in Norway has drove prices to levels not seen since January. The UK winter gas contract was shy of £1 level yesterday, having been just 80p just a couple of weeks ago. Iran over the weekend attacked Israel with more than 300 missiles and drones, claiming this was in retaliation for the strike on its Damascus consulate. Iran has also reiterated its threat to potentially block shipments through the Strait of Hormuz which a fifth of the world’s LNG and oil is exported. According to Rystad Energy, global LNG prices could jump to new records above USD 100/MMbtu (EUR 320/MWh) in “the remote possibility” that ongoing turmoil in the Middle East leads to disruptions to shipments. Whilst this is highly speculative it was enough to see oil and gas markets higher. Meanwhile lower temperatures forecasted this month and unplanned maintenances in Norway has also supported prices on the near term. With Norwegian exports up this morning there are no significant changes to fundamentals nevertheless geopolitical concerns continue to persist.
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