West Texas Intermediate contract posted a gain for the sixth consecutive session

13 January 2021

The front month February contract opened up with penny increase

Once again yesterday the UK NBP market displayed remarkable volatility with prices swinging by significant levels throughout the session.  The front month February contract opened up with penny increase which was modest enough given what happened in the remainder of the session.  This contract traded at a high of 83.50p and a low point of 67.00p, a 16.50p per therm swing over the course of the session.  At settlement this February contract settled at 76.60p, up by 10.60p from the previous session.  The same factors continue to influence the market with high demand for LNG in Asia causing concern regarding European supplies this Winter.

 The day ahead baseload power contract displayed considerable volatility

The GB baseload power marker surged higher on Tuesday as significant increases in UK NBP gas prices fed into the curve.  The power market was also negatively impacted by another electricity margin notice issued by National Grid.  This notice suggested a shortfall of 1.2GW from the ideal safety cushion.  Much of the pressure was on the front of the curve where February spiked by £11.40 to closes at £85.75/MWh.  Likewise, March added £7.90to finish at £72.25/MWh.  The day ahead baseload power contract displayed considerable volatility with prices increasing by some £37.60/MWh.  

 Brent crude contract for March delivery recovered all of the losses from the previous session

The Brent crude contract for March delivery recovered all of the losses from the previous session and added further premium as the oil market tracked some positive signs in U.S. equities.  Likewise, the West Texas Intermediate contract posted a gain for the sixth consecutive session and moved closer to a 11-month high.  It is apparent that the market is looking beyond the short term and anticipating a more positive economic outlook as the various Covid 19 vaccines are rolled out across the Globe.  At market settlement the Brent crude contract closed at $56.60 a barrel, up by 94 cents.  WTI reached $53.21 having gained 1.3% over the session.    

After four sessions of gains the UK gas market has taken a significant step lower on opening this morning

After four sessions of strong gains the UK gas market has taken a significant step lower on opening this morning.  The front month contract has shed 9.27p in early trading as the contract declines to 68.16p per therm.  Likewise, March & April have given up 8.05p and 4.00p respectively.  Volatility continues on the market and currently wide bid/offer spreads are evident on the prompt.  The spot contract is offered 73.70p with bids coming in at 56.00p.  On the more fundamental side weather forecasts are coming in milder for the rest of the month and this is providing some encouragement for prices to come lower.  The carbon market has shed 77 cents while crude oil is flat.