The Suez issue spikes fears over LNG shipments
Tuesday 6th April 2021
The bullishness seen across energy markets in the first half of March has continued, bolstered by the issue of the container ship blocking the Suez Canal. This backed-up freight for several days and more importantly for the energy market, slowed the shipment of LNG to Northern Europe. This increased gas costs and ultimately power. Other factors pushing energy prices higher included the sustained EU carbon price and higher coal costs, affected by flooding in Australia and freight delays in South Africa. There has also been general optimism associated with the US stimulus package and the vaccine rollout in the UK and US. However, some of the optimism has been tempered by renewed lockdowns across many parts of Europe, where the vaccine rollout remains slow.
Short-term has been supported by the recent cold snap, with the predicted Easter snow and sub-zero temperatures occurring as predicted. This has slowed gas storage replenishment, although sustained continental lockdowns should reduce demand and potentially reverse the bullish trend.