The one-day bounce in the UK NBP gas market came to an abrupt ending
The one-day bounce in the UK NBP gas market came to an abrupt ending during the session on Monday as gas contracts gave up the recently added premium and then went further lower. The gas market was weaker from the off and while there was an amount of volatility on the downside prices for all periods finished lower at settlement. The latest attempt to broker a ceasefire between Ukraine & Russia appear to be the main driver of sentiment on the day. It remains to be seen if this sentiment is well placed but the market was happy to push lower, nonetheless. At market settlement the front month contract was down by 40.14p while Summer 2022 and Winter 2022 were down by 35.65p and 37.18p, respectively.
The one-day rally on the GB baseload power market was short lived
The one-day rally on the GB baseload power market was short lived as premium flowed out of contracts during yesterday’s session. Despite no progress on ceasefire talks between Ukraine and Russia, negotiations are ongoing, and the market responded positively to the prospect of progress. Baseload power contracts followed their gas counterparts lower with contracts out to Winter 2022 fell by £27.50/MWh on average. Wind generation levels continue to run below seasonal norm, but strong interconnector flows offset these losses.
The panic that pervaded crude oil markets last week seems to have subsided
The panic that pervaded crude oil markets last week seems to have subsided as Brent crude moved further away from the 10 year high of $127 a barrel. The market appears to more optimistic that the loss of Russian crude oil can be replaced by other sources. The prospect of an increase in Iranian crude oil production dimmed as the nuclear talks were suspended despite recent positive developments. There is no doubt that the conflict in Ukraine is complicating this process. The latest round of talks to establish a ceasefire has given the market the impetus to shed risk premium and both the Brent and WTI contracts were happy to oblige on Monday.
Summer 2022 contract is displaying some volatility
Both the front month and May contracts have posted gains in early trading with prices for these periods up by 18.00p. The Summer 2022 contract is also displaying some volatility on the upside as price movement varies between 15.00p and 22.00p. The Winter 2022 contract is more stable and has retained the bulk of the losses from yesterday’s market as it trades at 268.00p per therm. Crude oil markets have extended losses for the second day in a row as the April Brent crude contract trades at $100.11 a barrel, down by $6.79. Forecast gas demand in the UK remains below the seasonal norm and the system is running with a small surplus this morning.