The new Omicron variant pressured crude oil prices

It was a session of wide intra-day swings on Tuesday

It was a session of wide intra-day swings on Tuesday for the front of the NBP curve as early gains were reversed very late in the session with the remaining three winter months settling down day on day.  The front month January, peaked at 258.88p, but a frantic sell-off in the last hour and a half of play saw the contract settle at 238.31p after news filtered through that Gazprom had booked 30MCM of capacity at the Mallnow entry point in Germany.  While this is consistent with the booking for November, the news seemed to ease the market’s fears for European supplies during December and European gas prices also tumbled.  NBP Prompt prices eased by between 1.00p and 5.00p yesterday with a system surplus weighing on the spot with settled at 229.05p.

Wind generation is expected to rise again today

The late reversal at the front of the NBP curve fed into the baseload power futures market on Tuesday but the January contract just failed to make it into negative territory.  December expired at £273.00/MWh and the February closed £9.15/MWh down at £262.85/MWh.  Carbon EUAs reversed some of Monday’s losses yesterday with contracts adding €1.15/ tonne. Wind generation is expected to rise again today with output forecast to top 13.5GW and the day ahead product eased by £4.00/MWh yesterday as a result. This level of wind generation would match gas fired generation in the power stack today but is expected to fall off tomorrow.

Brent has declined by almost $12.00 a barrel over the last week

Concerns over the spread of new Omicron variant pressured crude oil prices on Tuesday as contracts fell by around $3.00 a barrel.  Earlier in the session crude oil prices had firmed with expectations that OPEC+ who are due to meet on Wednesday, would hold plans to increase output in January.  The gains were short lived as fears of the new Covid variant took over market sentiment with questions as to the efficacy of vaccines on Omicron while reports of more nations increasing restrictions on travel added to concerns. Brent has declined by almost $12.00 a barrel over the last week with the January contract expiring at $70.57 a barrel yesterday.  West Texas Intermediate settled at $66.18 yesterday, shedding $3.77 a barrel.

Brent prices have recovered this morning

GB gas demand is 283MCM this morning and supplies are comfortable once again with the National Grid site showing a 19MCM surplus.  Increased wind generation has displaced some gas fired generation from the power stack this morning which has added to the system’s comfort. Prompt prices are unmoved so far with wide bid/ ask spreads holding back trades.  On the near curve, the January contract is marginally down at 237.52p while the summer contract has yet to trade. February is the new lead month for Brent and prices have recovered this morning with the last trade going through at $71.82 a barrel.