Key gas observations for the month ending 15 November 2018:
Gas prices in VIC, NSW, QLD and SA all increased over the last month relative to the same period in 2017. Sydney’s demand was higher, whereas demand declined in Adelaide and Brisbane.
Increasingly, domestic gas contracts are utilising oil linked pricing. Between mid-August and the end of October oil prices steadily increased reaching just above $76 USD WTI (NYMEX). From there, however, prices have declined significantly and are now sitting at $56 USD WTI (NYMEX). For participants who have oil linked contracts this is positive news. OPEC and its allies have advised that oil production will be adjusted in the interest of stabilising prices.
Gas Powered Generation (GPG) (electricity) continues to decline in terms of total output (MWh). AEMO has attributed this decline in generation to the increase in generation from new renewable generation sources. Somewhat ironically, the increased penetration of intermittent renewable generation in the national electricity market makes dispatchable GPG plant more critical. GPG, whilst expensive relative to coal, is much more flexible and is currently less expensive than battery generation.