Gas market is once again displaying weakness
08 July 2021
The sell off and the UK NBP gas market continued apace yesterdayThe sell off and the UK NBP gas market continued apace yesterday although it was by no means plain sailing. Initial early weakness was short lived as contracts staged a mini rally and near-term months posted gains in excess of 3.50p. The rally was short lived however and contract came under more price pressure as more positions were extinguished. Considerable volatility remains the order of the day with the front month August contract bearing the brunt as it traded to a high of 89.20p and low of 79.00p, a full 10.00p swing. This contract eventually settled near the low at 79.23p, down by 4.31p. Winter 2021 lost further value as it closed at 84.94p, down by 4.57p.
Volatility continued on the GB baseload power marketVolatility continued on the GB baseload power market and contracts gave up more premium for the second session in a row. The power market was responding to the wider energy complex where gas, EUA carbon and crude oil prices all went lower. While markets had opened firmer prices began to move lower in the afternoon session. The front month closed only marginally lower while September and October baseload shed £4.38/MWh and £2.40/MWh respectively. The day ahead baseload power contract also weakened as renewable power output picked up. Day ahead closed at £92.80/MWh, down by £2.80.
Crude oil markets remain under pressure and despite an early rally when Brent was in positive territory by 96 cents, both the Brent and West Texas Intermediate contracts posted losses on the day. Brent crude reached a three year high on Monday last but has been under pressure since as cracks begin to emerge in the OPEC+ group’s strategy in managing supply through production quotas. Key differences have emerged between Saudi Arabia and some other producers as global demand grows and how best to address this. At market close the Brent crude contract for August delivery was priced at $73.43 a barrel, down by £1.10 from the previous close.
Crude oil markets remain under pressure