Wholesale markets showed severe volatility in the last days of September as the main October Annual closed. A lack of physical gas due to Norwegian field outages and limited LNG availability meant that prices were bullish. Coupled with this was a dramatic increase in oil and coal, and increased end user gas demand as the weather cooled. As such, day-ahead gas hit an 18-year high for this time of year. However, there was a sharp correction in prices as demand dropped on warmer forecasts.

For the coming winter, fears remain about the ready abundance of gas, particularly if Europe sees a cold weather event similar to Winter ’17 / Spring ‘18. There is ongoing concern about nuclear reliability, with several Belgian reactors taken off line, UK reactors in scheduled maintenance, and what seems like the annual issue surrounding the French fleet. European gas storage remains relatively low, but a milder than expected October forecast should speed up replenishment prior to peak demand.

Brent crude is currently above $85 – a four year high – whilst US WTI is at $75. The Iran sanctions kick in next month, and there are doubts that OPEC will make up the Iranian shortfall. This has lead to predictions of $100 Brent, last seen September ’14. Coal is also high, offering further bullishness across fossil fuels.

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