Ukraine and Russia tensions provide support to gas markets

 The UK gas market experienced a volatile session on Friday

The UK gas market experienced a volatile session on Friday as prices opened higher and held on to most of these gains to the close.  At one stage the front two months were up by over 17.00p with Summer 2022 prices also trading up by a similar amount.  Gas prices did slide somewhat in the later part of the session but contract across the curve finished the day well ahead of their previous settlement.  The front month February contract finished at 189.31p, up by over 10.00 from the previous close.  The Summer 2022 contract peaked at 174.55p and subsequently closed at 169.15p, up by 10.00p.  While some supply niggles remain, the market is firmly focused on the Ukraine where tensions are ongoing as talks continue.

  A fall in the value of EUA and UKA carbon contracts

A fall off in wind generation pressured the power prompt as the minimum supply margin tightened.  Day ahead baseload power firmed by over £80.00 as the outlook for today turned negative.  At the market close the day ahead contract was priced at £270.75/MWh with considerable premium added over the session.  On the forward curve contracts also firmed in line with gas gains.  While the marker did finish off its high point of the day all contracts posted gains.  A fall in the value of EUA and UKA carbon contracts did provide a cap on the increase.  EUA contract shed €1.20 following the strong gains in the previous session.

Crude oil shed some premium on Friday

Crude oil shed some premium on Friday as the upward trajectory over the last number of sessions was paused for the time being.  The buildup in U.S. inventory stocks has given the market some food for thought and Friday’s market saw some taking profits after several session of gains.  New reports have also emerged that the U.S. authorities are considering accelerating the release of strategic reserves and this is also weighing on the market.  The short-term demand outlook remains positive, and it is likely that crude will continue to receive support.  At market settlement the Brent crude contract was priced at $87.89 a barrel, down by 49cents from the previous session.

 Strength displayed by the UK market on Friday has returned this morning

The strength displayed by the UK market on Friday has returned this morning with strong increases on all contracts on opening.  The front month February peaked at 204.64p earlier on and is now priced at 200.73p, up by 11.42p from Friday’s close.  The ongoing tensions between Ukraine and Russia continue to provide significant support to all European gas markets.  Overall, the supply demand balance remains on par with the back end of last week with forecast demand coming in at 342MCM.  There is a slight supply deficit of 4MCM but with LNG send out ramping up this is not expected to last.  Brent crude is priced at $88.09, up by 20 cent.  

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