Crude oil prices shed over $3.00 a barrel

Gas futures at the NBP opened with strong declines

After a buildup in tensions between Russia and the West over the weekend, Tuesday brought some relief with news of a withdrawal of some Russian units from the Ukraine Boarder.  Gas futures at the NBP opened with strong declines with up to 15.00p off the near months within the first hour.  As the day progressed, there was some signs of caution as contracts at the front of the curve showed some volatility as the conflict between Russia and the Ukraine is still to be resolved.  Later in the session losses were extended with near months settling down by an average of 23.40p.  Prompt prices dropped sharply on the day with the spot and day ahead closing down by around 27.00p.

The front of GB baseload curve recorded significant losses

The first sign of tensions easing between Russia and the West appeared on Tuesday and the wider energy complex turned lower as a result.  The front of GB baseload curve recorded significant losses on the day as near months shed £18.00/MWh on average.  Carbon EUAs also moved lower yesterday with the spot closing below €90 per tonne for the first time since 01-Feb-22. Baseload power for the day ahead declined by £18.50/MWh yesterday with wind expected to increase from Tuesday’s levels of 10.5GW to over 12.5GW for today.  This should put wind generation at the top of the stack making up over 35% of GB power demand.

Both the benchmarks had hit their highest levels since September 2014

Crude oil prices shed over $3.00 a barrel in response to the news that some Russian units had completed military exercises along the Ukraine boarder and had started to return home.  Brent settled $3.20 down at $93.28 a barrel while the U.S. benchmark, West Texas Intermediate, closed at $92.07 a barrel down $3.39.  Both the benchmarks had hit their highest levels since September 2014 on Monday with Brent peaking at $96.78 a barrel intra-day. The talks between the U.S. and Iran continue to give hope that the removal of sanctions on Iran will allow more Iranian crude into the market and ease current tight supplies.

Latest trades have seen a partial reversal of the opening losses

The NBP gas futures market opened as it has left off last night with near months trading down by almost 15.00p, however, latest trades have seen a partial reversal of the opening losses and the front month last trading at 165.20p, down 5.69p from yesterday’s close. Prompt prices have yet to spring into action but wide spreads on the spot and day ahead products seem to be stalling trades.  The UK gas system is showing a surplus as demand has dropped to 232MCM with the mild temperatures and increasing wind generation displacing gas load.  Crude oil prices have rebounded a touch this morning with both benchmarks up around 70 cents a barrel.

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