Flagship Energy’s Tejal Shah Energy Markets Update – 27th September 2023

Tejal Shah, Head of Trading & Risk at Flagship Energy answers key questions about the markets

What’s happening in the markets and why?

Call it confidence in Norwegian maintenance coming back or short covering ahead of contract expiry, the market finally unwound gains seen over the last few sessions. The UK gas curve fell around 10% yesterday and continues to trade lower this morning. The day-ahead contract pushed above 100 p/th testing some key technicals however has made a fast turnaround.

Although there were some concerns the Australian strike saga may reignite as Chevron allegedly did not deliver on the agreed terms and potential for further maintenance extensions on the Norwegian Continental Shelf, the market sentiment appears to be changing. Weak demand due to mild temperatures and lower gas for power demand in the UK with storm Agnes bringing strong winds over the coming days appears to weighing on prices. LNG send out has also increased with several cargoes expected over the coming days as we enter the winter period. Should I dare say everything is looking pretty comfortable as we transition into the new season.

What should energy buyers look out for?

We are still not out the woods in terms of Norwegian maintenance, any extensions could continue to support the market. Changes to weather forecast, Asian LNG demand and any supply disruption over the coming months will be key to prices.

What would you recommend?

As we head into the winter period, whilst things a looking comfortable right now, any risks to the upside could see disproportionate price movements as the market still appears to be nervous with supply remaining tight. Price volatility is here to stay and therefore based on your risk appetite you may want to have a proportion covered.

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