Buying interest is exceptionally strong this morning

UK gas market continued to soften on Thursday

The UK gas market continued to soften on Thursday with near futures losses gradually diminishing from a maximum of over 100p on December 23 to an average of 22p yesterday.  Although the scale of daily losses has reduced, yesterday marked a fifth consecutive day of decline on the UK gas market which has halved near futures prices over that period.  From a peak of 450p on December 21, the January contract has shed 240p to expire at 210.34p on Thursday.  The day ahead contract has tumbled from 435p on December 23 to 172p yesterday as the supply-demand situation improved and milder weather prevails.

Baseload futures power tracked GB gas prices lower again

Baseload futures power tracked GB gas prices lower again on Thursday with the improving supply outlook for gas driving the market yesterday.  The Q1 22 contract shed a further £18.35/MWh but remains at almost £250/MWh.  Carbon price recovery helped support contract further out the curve yesterday. Day ahead was down £34 to a 4-month low of £114.66/MWh on low demand and strong wind generation levels.  The week ahead contract shed £82.00 to £167.50/MWh despite forecast lower temperatures and lower wind generation levels for the first week of January.

 February contract for Brent crude gained marginally

The February contract for Brent crude gained marginally in thin liquidity as it expired at just under $80.00 a barrel yesterday.  The global benchmark has shown resilience to the spread of coronavirus in recent days and has gained $4.00 over the past 5 sessions.  Demand for distillates in the U.S., where refined product saw the second highest weekly demand last week, is defying the surge in coronavirus cases and the reduction in aviation activity.  OPEC meet on Tuesday next to consider production levels and indications as of now suggest that they will agree to continue with the monthly production increase of 400,000 barrels.

NBP has re-opened this morning with a large gain across the board

Following multiple sessions of significant losses and the market being closed for the New Year holiday the UK NBP has re-opened this morning with a large gain across the board.  The new front month February contract has gained over 70.00p in early trading and is priced at 241.00p while other Winter delivering months are up by similar amounts.  The summer 2022 contract has also added 56.00p as contracts seek to regain some of the huge premium that has been lost in the last five sessions.  Buying interest is exceptionally strong this morning as industry returns after the extended holiday period.      

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