Near months have opened with sharp losses

19 November 2021

 NBP gas futures settled with minor gains

NBP gas futures settled with minor gains after a volatile day of trading on Thursday while prompt prices reacted to a comfortable gas system and forecasts for cooler temperatures next week.  Gas demand was 230MCM yesterday and supplies were running with a surplus through the afternoon which pressured the spot and day ahead products and both ended the session 7.00p lower.  The cooler temperatures expected for next week supported the week ahead and balance of month contracts which settled higher on the day.  Near futures opened softer but gained through the day and a late selloff prevented the winter months rising by more than 1%.

  Carbon provided support to the baseload curve

The swings in gas futures on the NBP was mirrored in the GB power market while carbon also provided support to the baseload curve late in the session.  The remaining winter months settled an average of £2.60/MWh higher yesterday, while carbon EUAs edged closer to €70 per tonne mark as contracts out to 2023 settled €1.51 higher on average. Baseload for the day ahead eased by £4.47/MWh as wind generation is to remain elevated and temperatures for Friday and the weekend are to stay mild.  Next week should be cooler and could see exports to the continent drop off as the first real test of the winter hits northern Europe.

  Crude oil prices opened with losses

Crude oil prices also opened with losses on Thursday and prices firmed over the session leaving Brent to close 96 cents a barrel higher.  There were reports that some Asian nations including China were considering a release of strategic oil reserves to meet demand.  This is believed to be in response to the U.S. requesting large consuming nations to tap oil reserves in an effort to halt escalating oil prices which are feeding into inflation rates.  The U.S. has failed to pressure OPEC into increasing output at a quicker rate as the group have adhered to their schedule of increases at 400,000 barrels per month. Flooding the market with more oil would see prices ease and yesterday Brent dipped below the $80 a barrel mark briefly before settling at $81.24 a barrel.

Possible release of strategic oil reserves

High wind generation coupled with the mild temperatures have seen GB gas demand drop to 219MCM this morning. Supplies are long by 15MCM and with the system so comfortable the spot price should open softer, although no trades have been completed on the prompt market as yet.  Futures are active, and near months have opened with sharp losses as the front month last traded at 223.75p. down 16.05p.  Crude oil prices have yielded $1.50 a barrel in Asian markets over night and early trading across Europe as the market considers the possible release of strategic oil reserves by higher consuming nations.