Gazprom to prioritize domestic supplies
The focus of the UK and general European gas market remains firmly on the prospect of supplies from Russia for the coming Winter. For the second session in a row significant premium was added to near term contract and further premium reverberated across the wider curve. The market was responding to an announcement by Gazprom that it would prioritize domestic supplies which could lead to a reduction in supply to Europe. Recent losses on the UK NBP market have been eroded in the last two sessions as contracts spiked for a second session in a row. The front month November contract settled higher by 21.86p and is now priced at 257.61p per therm.
GB baseload prompt and futures contracts made significant gains
GB baseload prompt and futures contracts made significant gains once again yesterday on a combination of a tightening system, strong gas gains and increasing carbon prices. The front month November baseload contract posted a gain of £16.50, and December added £10.50 as both these contracts settled at £259.00/MWh and £252.00/MWh respectively. The day ahead baseload contract recovered the losses from the previous sessions and added £76.00 to bring the price to £260.15/MWh. Both EUA and UKA carbon contracts posted strong gains with EUAs gains outstripping the UK product.
The market opened higher from the outset and peaked at $84.50 per barrel
Crude oil market recovered the losses from the previous two sessions with ease on opening and pushed even higher as the market continued to weigh conflicting signals. The market opened higher from the outset and peaked at $84.50 per barrel but that was the best it did for the day. Crude lost value during the afternoon session as the market began to shift its focus back to the prospect of demand peaking in 2025 as the target of net zero emissions by 2050 comes into view. Other pessimistic reports from the IMF and OPEC did not do much improve the outlook for crude demand but, Brent crude did post a gain of 82 cent on settlement as the market closed at $84.00.
Early weakness on the curve has turned into a full-blown sell off
The gas market appears to have had a change of mind this morning and some early weakness on the curve has turned into a full-blown sell off as contracts shed significant premium. The from month November contract has shed 16.11p in the last hour or so and is now trading at 241.50p per therm. Both the December and January gas contracts are experiencing a similar fate with losses of 17.00p on these periods. There is no significant change in market fundamentals and as ever sentiment appears to be the key driver in the market this morning. Crude oil contracts continue to push higher, and Brent crude has added a further 71 cents and is priced at $84.71 a barrel.