Contracts at the front of the curve moved between gains and losses
Trading on the UK NP gas market was somewhat a mirror image of the previous day’s session where contracts at the front of the curve moved between gains and losses and the seasons ticked up across the day. The tensions between the West and Russia over the Ukraine remains the overriding issue and with little news on progress to resolve the impasse, energy markets across Europe remain on edge. It would appear that while the sides remain far apart, both the West and Russia are keen to remain engaged. On the more fundamental side gas demand remain low at 297MCM for this time of year and some storage injections actually took place on Thursday as the system ran long.
EUA carbon cost have increased strongly in recent weeks
The baseload power prompt and near-term future contracts have turned their face away from the troubles in Eastern Europe and instead are taking their lead more normal fundamentals. Milder weather and plentiful supply. Both the front month and March futures contracts shed modest premium of £1.50 and £0.75 respectively. Baseload power posted gains from April onwards as higher fuel and EUA carbon input costs impacted. EUA carbon cost have increased strongly in recent weeks as thew annual compliance date approaches. The Summer 2022 baseload contract finished at £191.50/MWh, up by £2.25.
Brent crude contract traded above $90.00 a barrel
The Brent crude contract traded above the psychologically important $90.00 a barrel mark for much of the session yesterday as a number of different factors continue to provide support for global crude oil markets. Chief among them is the ongoing tensions between the West and Russia over Ukraine which has created a significant amount of anxiety across the total energy complex. That said, the market seemed to pause the push higher later in the day following two sessions of gains. The recent build in U.S. crude oil inventories may have given the market food for thought and it will be interesting to see if the $90 market and beyond proves a bridge too far for crude.
Crude oil has established a tenuous foothold
UK NBP gas contracts have continued where they left off yesterday and the market is following a similar pattern that we have observed in the last few days. The build in premium continues this morning with near term contracts up on opening by just over 3.00p per therm. Seasonal contracts have yet to trade and with wide bid offer spreads at the moment it is not altogether clear where prices will go. Overall gas supply conditions remain broadly positive in the UK where high wind generation availability and lower than normal demand for this time of year persist. Crude oil has established a tenuous foothold above $90a barrel as Brent trades at $90.02.