NBP continued to climb
Natural gas futures on the NBP continued to climb into new territory on Thursday as Europe braces itself for tight supplies ahead of the winter. Near futures rose steadily through the day with activity focusing on the August contract which expired on ICE yesterday. Near months added an average of 3.50p while contracts from the summer out settled less than a penny higher. On the prompt there were strong gains too with all contracts closing above 104.00p despite demand being eased by increased wind generation yesterday which is likely to continue into the weekend.
Wind generation rising
GB baseload power futures continue to be supported by the bullish gas prices and near contracts moved above £100.00/MWh yesterday with August settling at £103.70/MWh gaining £5.20/MWh on the day. It was the largest gain on the day and contracts past the winter settled with more modest gains. With wind generation rising to 9.0GW on Thursday and expected to remain at this level for the next few days. Baseload for the day ahead largely ignored this and took its lead from its counterpart on the NBP going on to settled above £100.00/MWh.
Brent crude settled higher
After being rangebound for much of the early part of the week, Brent crude settled $1.31 a barrel higher on Thursday as the market hung its hopes on a U.S. economic recovery. The U.S. Fed said in a policy statement on Wednesday it is to hold off tapering bond purchases for the near future while a recovery remains on track. More support for crude oil prices came from the latest data out of Cushing, Oklahoma. The key hub for U.S. crude oil storage has recorded seven consecutive weeks of lower stocks with reserves down by 361,000 barrels in the last week. A weaker dollar and more delays in Iranian nuclear talks also added to the gains on the day.
Finally, some relief for NBP futures
The GB gas system is forecast 14MCM long against today’s demand of 144MCM according to the National Grid’s site this morning. The supply make up is much the same as it has been for the week with Norwegian imports nominations slightly up at 69MCM today. After four days of strong gains there is finally some relief for NBP futures with September, the new front month on ICE down by almost 2.00p in early exchanges. Trading on the prompt has yet to commence but contracts should open softer given the reductions seen at the front of the curve and the comfort in the gas system this morning. Crude oil prices have also eased in early trading with Brent 17 cents a barrel lower at $73.45 a barrel.