Gas market retains a keen eye on events on the Russia/Ukrainian border

 Contracts at the front of the NBP gas curve remain uncertain

Contracts at the front of the NBP gas curve remain uncertain as to what direction to take as prices yesterday swung between gains and losses over the course of the session.  Both the February and March contracts opened 15.00p and 12.00p lower and while these losses did not stick, neither contract was in positive territory over the course of the session.  At market closed these Winter months finished at 219.17p and 219.22p, down by 6.19p and 5.14p respectively.  The Summer 2022 contract was less frequently traded and wide bid/offer spreads were a feature here, but prices did finish up by 3.29p.  Overall, the market retains a keen eye on events on the Russia/Ukrainian border and premium continues to build while the crisis remains unresolved.

Baseload for the day ahead continued to weaken

The front month and March GB baseload power contracts gave up some modest premium yesterday pressured by weaker near-term gas costs and declining spark spreads.  That was as good as it got for the power curve as remaining contract moved higher on more expensive fuel and carbon costs.  the Summer 2022 contract closed at £18.25/MWh, up £3.25 while Winter 2022 added £4.25 to close at £198.75/MWh.  Baseload for the day ahead continued to weaken as a healthy system margin weighed on this market.  Wind generation is forecast to maintain the current high level of output with forecasts coming in at 8.5GW.

Crude oil markets continued to push higher

Crude oil markets continued to push higher on Wednesday and for the second session in a row further premium was added.  The market is once again trading at a seven year high as crude approaches the $90 a barrel mark.  The tensions in Ukraine are playing a part but yesterday’s focus was also on the latest release of U.S. inventory data and the supply/demand outlook.  The fact that the OPEC Group continues to miss the mark in terms of production remains a concern.  It is also becoming clear that the U.S. Federal Reserve will move to increase interest rates in the near future, and this is also impacting on the direction crude is taking.

Forecast gas demand in the UK continues to decline day on day

Forecast gas demand in the UK continues to decline day on day and is set so 200MCM today.  High levels of wind generation are pushing gas generation out of the stack and dampening demand.  The gas system is finely balanced at the moment with supply and demand evenly matched.  Gas send out from the various sources remains consistent with recent days.  On the gas market, near term gas contracts have added a minor amount of premium but both the front Summer and Winter have continued where they left off yesterday and are up by almost 3.00p.  Brent crude is trading above the $90.00 a dollar mark at $90.18 a barrel.  

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