Baseload futures tumbled on Monday

Increased LNG arrivals have boosted supplies across Europe

The prompt and near curve contracts on the NBP moved into reverse on Monday as the weather outlook should curb gas demand.  Temperatures in the UK are set to be 2-3°C higher than average for the next two weeks according to the latest forecasts while a high level of wind generation should also displace gas fired generators from the GB power stack.  While the spot and day ahead products shed 31.00p, futures contracts out to next winter settled 17.00p down on average with March, the new front month for ICE closing at 203.08p.  18 LNG cargoes arrived at British ports over the last two weeks and a further 12 are due in February.  Increased LNG arrivals have boosted supplies across Europe but tensions between Russia and Ukraine still pose a risk.

 Carbon EUAs reversed the minor losses from Friday

Baseload futures tumbled on Monday in response to the declines seen on the NBP curve. February on the last day of trading for the contract settled at £200.00/MWh, down £16.00/MWh.  The summer contract shed £10.50/MWh on the day to close at £184.00/MWh.  Carbon EUAs reversed the minor losses from Friday with the spot closing at €89.22. Wind generation is not expected to reach the levels seen on Monday but should exceed 12.5GW. The outlook for the remainder of the week is for a strong performance in the power stack from wind which may weigh on the prompt. The day ahead contract settled flat yesterday.

The front month for Brent crude continued to edge higher

The front month for Brent crude continued to edge higher on Monday, consolidating its position above the $90.00 a barrel marker.  It was the final day of trading for March contract yesterday which settled at $91.21 a barrel, a new seven year high and gained $1.18 a barrel on the day. The April contract will be promoted to front month status from Tuesday and settled at $89.26 a barrel on Monday.  The geopolitical tensions continued to support crude oil prices yesterday while a weaker dollar also provided some support.  OPEC+ are due to meet on Wednesday and it’s assumed the group will adhere to their promise to unwind production cuts from 2020 by increasing output by 400,000 barrel per month.

Near NBP futures have continued to decline

With crude oil prices hitting a seven-year high yesterday there is a sell off this morning as investors seek to bank profits after recent gains.  The global benchmark, Brent last traded at $88.41 a barrel for the new front month April.  West Texas Intermediate is also trading around 80 cents a barrel lower at $87.34 a barrel in early trading.  In the gas markets, near NBP futures have continued to decline with latest trades for March at 180.16p and the summer at 176.90p.  Prompt prices have also opened softer, but losses are more modest.  The GB gas system is 16MCM long this morning against today’s forecast demand of 274MCM.

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