Brent crude closed at a new two-month high

NBP gas futures and prompt prices reversed tack

Having opened firmer on Wednesday, NBP gas futures and prompt prices reversed tack, and ended the session significantly lower.  The remaining winter months averaged losses of 10.00p while prompt products shed between 11.00p and 15.00p yesterday.  The mild winter weather so far along with the arrival of a record volume of LNG supplies for January has quelled market sentiment and pressured gas prices across Europe.  GB ports are set to receive 27 deliveries of LNG this month, which is a massive increase on last January when only seven cargoes arrived.  Nearly all the deliveries so far have originated in the U.S. which have stepped up LNG production.  Last January the lion’s share of LNG cargoes was headed to Asia in response to record prices for the JKM.

 Baseload for the day ahead fell on the day but the loss was marginal

Baseload power futures prices in the UK were pressured by falling gas and carbon prices on Wednesday.  The February contract closed £17.50/MWh down at £191.50/MWh, racking up a five-day losing streak for the product. The summer and winter contracts closed an average of £13.50/MWh lower while declines for contract past this were around £3.00/MWh. Baseload for the day ahead fell on the day but the loss was marginal.  While the outlook for gas has improved, wind generation is forecast to stay at lower levels going into next week while temperatures are to fall so supply margins may narrow and support the prompt in the short term.

 Crude oil prices consolidated gains on Wednesday

Crude oil prices consolidated gains on Wednesday after the release of the latest report from the Energy Information Administration.  Brent crude settled 95 cents a barrel higher and closed at a new two-month high following this week’s U.S. inventory data.  The E.I.A. revised a previous forecast of a build in global crude stocks over Q1 2022 and now say global reserves will remain stable in the quarter.  The report also showed a decline of 4.6 million barrels in U.S. crude oil reserves over the last week, which leaves stocks at the lowest levels in three years.  The U.S. dollar weakened on the day which added support to crude oil prices.

GB gas system has opened short again today

The GB gas system has opened short again today with demand slightly higher at 343MCM while supplies are lagging by 13MCM.  LNG send out is around 20MCM down on yesterday’s levels of 125MCM while Norwegian imports through the Langeled feed are close to capacity.  The prompt board is not showing any prices yet but there is activity on the NBP futures market with near months displaying volatility.  February has traded between 182.00p and 173.87p and last traded at 178.50p, down almost a penny and a half.  In the crude oil markets, latest exchanges have seen Brent and WTI go through around 25 cents a barrel higher with Brent last trading at $84.93 a barrel.    

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