Gas market prices moving lower this morning

The UK gas system was oversupplied on Monday

The UK gas system was oversupplied on Monday despite a falloff in LNG send out over the course of the day.  Forecast demand for the day was just 270MCM and this included the export of 18MCM via the interconnector.  Just over 21% of gas demand was coming from the power sector as wind generation dropped off slightly.  The gas market opened with a gap up of 14.00p but failed to hang on the majority of these gains.  Gains on front month contract oscillated between 3.00p and 7.00p for most of the session before March closed at 193.00p/therm up by 7.13p.  Along the rest of the curve gains were similar with both Summer 2022 and Winter 2022 finishing up by just over 7.00p/therm.

Power market was happy to ignore the bearish factors of lower UKA carbon costs

The GB power market was happy to ignore the bearish factors of lower UKA carbon costs and the well supplied system as wind generation and lower domestic demand keeps the supply margin wide.  The main price supporting factor was the escalating tensions on the Ukraine-Russian border.  GB baseload power futures firmed across the curve with between £5.00 and £7.00 added.  Going against the general direction in the market the Summer 2024 contract shed £5.45 to close at £95.55/MWh.  Day ahead baseload power firmed by £13.00 as it followed its gas equivalent higher.

  Crude oil markets were volatile yesterday

Crude oil markets were volatile yesterday continuing in the same fashion at the back end of last week with the current geopolitical tensions in Eastern Europe providing direction.  The market opened higher along with the other elements of the energy complex, but these early gains were extended.  The Brent crude contract for April delivery actually fell to $93.44 at one stage going against what was happening elsewhere.  The ongoing tensions in Eastern Europe are playing a part in giving crude direction but recent International Energy Agency (IEA) is also playing a role.  The Brent crude contract traded in positive territory for most of the session and settled at $96.488, up by $2.04 from the previous close.

The front month March contract has shed over 13.00p in early trading

The early morning announcement that some Russian units are been withdrawn from the Ukrainian border has been welcomed by the gas market with prices moving lower.  This is not the end of the crisis, but it is the first positive development in some time.  The front month March contract has shed over 13.00p in early trading and is priced at 180.00p per therm.  Likewise, Summer & Winter 2022 are trending lower by 11.00p.  The UK gas system is well supplied this morning with forecast demand at 271MCM and supplies coming in at 278MCM.  Crude oil and carbon markets are also releasing premium with Brent crude priced at $93.82 a barrel, down by $2.66.

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