Volatility remains on the gas market
06 January 2021
The gas system ran with a surplus of 16MCMFollowing a strong run up in gas prices over the Christmas period and early into the New Year, gas markets reversed track on Tuesday with significant losses evident across the UK NBP curve. Much of the pressure was on the front of the curve where at one stage the front month February contract was marked down by just under 6.00p. At market settlement this contract was priced at 54.02p per therm, down by 5.43p from the previous settlement. The Q2 2021 contract gave up 2.19p as it settled at 42.49p. The gas system ran with a surplus of 16MCM despite high demand from the distribution heating sector. Prompt price also declined as a result with the spot falling by 5.85p per therm.
GB baseload power futures broke a five-session winning streakGB baseload power futures broke a five-session winning streak on Tuesday as prices across the curve turned lower. The power market reflected the movement on the NBP gas market where significant premium was also driven out of contracts. The front month February contract came under the most pressure and shed £4.30 to close at £63.70/MWh. The situation was rather different on the power prompt where prices surged in response to an electricity margin notice issued by National Grid. The spot surged to £147.00/MWh at the close up by £79.00 from the previous day.
Crude oil markets gained strongly on Tuesday as it became apparent that Russia and Saudi Arabia were nearing an agreement on production levels. The wider OPEC plus Russia had been locked in discussions in recent days and it was clear that Russia was keen to increase its production. However, a consensus emerged which apparently allowed for all parties to keep production levels unchanged in February. The market took this as a positive sign and both the Brent and WTI contract surges as a result. It is not altogether clear if this optimism will prevail for the long term given the rolling lock downs across the globe and threat of further demand destruction.
Crude oil markets gained strongly on Tuesday