ASX energy shares losing charge amid fresh warnings of gas supply shortfalls

Many energy commodity prices fell overnight and this is hitting ASX energy shares today.

Worker inspecting oil and gas pipeline.

Image source: Getty Images

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Most ASX energy shares are down on Friday with the S&P/ASX 200 Energy Index (ASX: XEJ) the worst-performing sector, slumping 1.4%.

The rest of the market isn't having a great day either, with only healthcare shares and property shares in the green. The benchmark S&P/ASX 200 Index (ASX: XJO) is down 0.48%.

A poor trading session overnight for gas, oil and other energy commodities is likely weighing on ASX energy shares today.

On top of that, the Australian Energy Market Operator (AEMO) has issued a fresh warning about future gas supplies and the potential for shortfalls as early as next winter.

ASX energy shares lagging the market

Firstly, let's review the state of play among the big energy stocks on Friday afternoon:

  • Whitehaven Coal Ltd (ASX: WHC) shares are down 1.94%
  • Santos Ltd (ASX: STO) shares are down 0.8%
  • Woodside Energy Group Ltd (ASX: WDS) shares are down 1.83%
  • New Hope Corporation Ltd (ASX: NHC) shares are down 2.2%
  • Ampol Ltd (ASX: ALD) shares are down 1.21%
  • Paladin Energy Ltd (ASX: PDN) shares are down 1.43%
  • Boss Energy Ltd (ASX: BOE) shares are down 0.81%
  • Deep Yellow Ltd (ASX: DYL) shares are up 0.36%

Overnight, UK gas prices fell 4.22% and TTF gas prices fell 4.83%.

Also overnight, coal dropped 0.5%, and US gasoline fell 0.02%.

Uranium fell 6.59% to US$85 per pound.

Oil prices are also trading lower today.

West Texas Crude (WTI) oil dropped 0.5% to US$80.55 per barrel. Brent crude oil is also down 0.5% and trading at US$85.22 per barrel at the time of writing.

New AEMO warning on east coast gas shortfall

In other energy news, AEMO released its 2024 Gas Statement of Opportunities (GSOO) report yesterday.

In it, AEMO forecasts a gap in gas supply for the southern states from 2028.

This is due to production from Bass Strait continuing to fall amid rising demand.

The report highlights the risk of peak-day shortfalls on some days under extreme winter conditions from as early as next year. There is also the potential for small seasonal supply gaps from 2026.

According to the GSOO:

The report signals that new investment is urgently needed if gas supply from 2028 is to keep up with demand from homes and businesses, and for gas-powered electricity generation.

AEMO CEO Daniel Westerman said:

Since the 2023 GSOO, a range of storage and pipeline projects have been completed, improving gas supplies to southern states that will help offset declining production from Bass Strait gas fields.

However, gas production is forecast to fall faster than demand in the south, driven by declining production from Bass Strait, which has historically supplied around two-thirds of southern Australia's gas.

Westerman reiterated that gas-powered electricity generation will play a key role in the transition to a green energy future.

He said:

Flexible gas-powered electricity generation is an essential component of the energy mix into the future.

Gas, along with batteries and pumped hydro, will enable higher rates of renewables and support electricity reliability as Australia's coal-fired power stations retire.

Motley Fool contributor Bronwyn Allen has positions in Woodside Energy Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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