According to Cedigaz, the NBP spot price for Q1 2018 settled at $8 MBtu, a level that is relatively high compared to the same period last year ($6/MBtu). The NBP price and the LNG spot price in Japan are trending in parallel, with the former presenting a discount of between $0.6 and 1.3/MBtu NBP, depending on the level of demand on the Asian market.
As for forward prices, the current tendency also parallels the LNG spot market in Japan. Prices of $7/MBtu – $1.5/MBtu higher than last year – are forecast for Q2 and Q3. Next winter’s prices ($7.7 to 8/MBtu) are in line with last winter’s.
For spring and summer, the increase compared to 2017 may be attributed to the trend in the CO2 EUTS price (See Figure). Rising from €5 to 13/tCO2, the cost of coal-fired electricity has increased by about €7/MWh at a time of relative stability in coal prices.
This has led to a higher reference price for gas. The LNG spot prices in Asia evolve in line with this reference price, with deviations dictated by the supply/demand balance.
Conversely, in winter, the reference becomes the price of Asian oil-indexed contracts and the NBP aligns itself with the Asian LNG spot price with a discount depending on the level of demand.