Brexit and the impact on the UK Energy market

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U.K. natural gas is one of the few commodities world-wide which is actually being boosted by the decision to leave the European Union but European gas markets are set for a week of uncertainty as traders process the impact of the UK’s decision to leave the European Union. On top of that, the Dutch government has proposed cutting the production cap for the country’s largest gas field, creating something of a perfect storm for European gas market participants to deal with.

U.K. natural gas is arguably the most important natural gas hub globally. It has the highest trade volume of any gas hub in Europe and is used to regulate supply across the continent, with the U.K. being capable of both importing and exporting volumes of pipeline gas and liquefied natural gas. Many gas traders, even in Asia, price their gas deals off the U.K. hub because of its liquidity and strength in prices.

U.K. natural gas is one of the few sterling-denominated commodities. Most European natural gas contracts are denominated in euros and world-wide, most commodities, including liquefied natural gas, are denominated in the U.S. dollar.

 

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