Gas contracts experienced wild swings yesterday

01 October 2021

Once again yesterday UK NBP market posted huge increases for Winter months

Once again yesterday and for multiple session in a row the UK NBP market posted huge increases for Winter months.  Yesterday’s market saw the expiry of the October, Q4 2021 and Winter 2021 contracts.  This event usually heralds a significant amount of trading in any given year and it would appear that this has been accelerated this year.  Gas contracts at the front of the curve experienced wild swings during the trading window and eventually settled by up over 25.00p on the day.  In what was a widely unpredictable market some trades went through below the previous settlement for a brief time in the afternoon window.  The new front month November contract traded at a high of 256.00p and then a low of 224.00p.  It settled at 251.18p per therm, up by 24.69p on the day.

Baseload power prices continued to push higher

Baseload power prices continued to push higher as several key contracts reached expiry.  October, Q4 2021 and the Winter 2021 contracts all expired at record highs and there appears to be no end to the relentless rise in prices.  The GB power market volatility continues to be driven by ever increasing UK NBP gas products. The day ahead contract was once again stable as the minimum supply margin widened on plentiful renewable generation.  The day ahead power contract added little more than a £1.00 as it closed at £162.60/MWh.  Both the EUA and UKA carbon contract shed value, but this had little impact on power prices.

 Crude oil market was relatively stable on Thursday

Crude oil prices held on to the losses from the previous two sessions as the market was relatively stable on Thursday and prices did not stray too far from their previous settlements.  Recent declines in demand in India and China which led to falls in exports from Saudi Arabia has given the market food for thought about the next direction OPEC will take in relation to production quotas.  The next meeting of the cartel is due next Monday and inevitably market participants appear to be taking a cautious approach as to the direction OPEC may take.  Brent crude traded in a range of $1.50 but settled at the lower end of this range at $78.31, down by just 33 cents on the day.

November gas contract has opened 10.00p lower than last night’s close

On its first day of trading as the front month the November gas contract has opened 10.00p lower than last night’s close.  This is not surprising given the frenzied nature of trading in the final part of the session yesterday.  Losses have narrowed in the last hour and November is priced at 247.50p, down by just 3.68p.  It is the same story for other winter delivering contracts as losses shrink as more trades go through.  Once again, the UK gas system is quite comfortable with demand forecast at 199MCM while supplies are 18MCM ahead of that figure.  Crude oil contracts remain under pressure and have opened weaker this morning.  Brent crude is priced at $78.52 a barrel, down by 21 cents.