Report of an outage caused contracts on the NBP to surge

Issue at the Troll field could restrict gas flows to the UK by 26MCM

A late report of an outage reducing imports of gas from Norway caused prompt and near month contracts on the NBP to surge yesterday afternoon.  The issue was at the Troll field and could restrict gas flows to the UK by 26MCM but is expected to be repaired early next week.  With that said the market reacted strongly with contracts which were trading between 5.00p and 12.00p lower reversing tack and moving into positive territory.  By the close, the spot and day ahead products closed around 25.00p higher, as did the remaining months of the winter.  There are reports that up to 17 LNG vessels are expected to arrive at UK ports by the first week in February so yesterday’s spike in prices may be short lived.

Reports of the Troll field outage came late in the session

The reversal in direction in the NBP gas futures market fed into the front months of the baseload power curve yesterday. Reports of the Troll field outage came late in the session, but the February and March contracts settled higher.  Baseload contracts further along the curve gave up the majority of the earlier losses but the Summer-22 product settled £3.00/MWh down. Wind generation was higher than forecast yesterday at 6.2GW but is expected to fall below 1.0GW today. This combined with a late surge in the NBP prompt supported the baseload day ahead product yesterday which settled 44.0% or £87.65/MWh higher.

The crude oil markets were pretty much directionless on Thursday

The crude oil markets were pretty much directionless on Thursday which prompted a late selloff by profit takers after recent gains.  The latest report from the E.I.A., released on Wednesday, while it showed a greater than expected fall in crude oil reserves reported gasoline stocks had increased by 8 million barrels last week.  This number pointed out that U.S. fuel demand has been hurt more than originally expected by Omicron.  Meanwhile the dollar continued to weaken which prevented crude oil prices falling more on the day. At the close Brent settled at $84.47 a barrel, down 20 cents a barrel.

late run up in gas prices on the NBP has continued this morning

The late run up in gas prices on the NBP has continued this morning and extended further into the curve. The front month last traded at 224.51p and is up 19.54p while the summer contract has gained 23.07p at 180.00p.  The bid/ ask spreads on the prompt are wide and contracts look set to open higher also.  The GB gas system is in balance this morning with demand for today forecast at 343MCM.  LNG send out remains robust but total imports from Norway are down at 87MCM today due to the issue at the Troll field.  Crude oil prices have reversed yesterday’s losses and edged higher as the dollar continues to show weakness.  

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