The gas market experienced another volatile day of trading

Early price pressure saw contracts extend gains

The final settlement price on the UK gas market yesterday did not tell the full story of the NBP curve in what was another volatile day of trading.  Early price pressure saw contracts extend gains for a fourth session in a row.  The April contract settled for the final time on Spectron at high point of 305.78p/therm and a low of 273.10p/therm, a spread of 32.68p. This contract traded to a high of 416.82p on the 21st of December 2021.  The market was underpinned by the announcement from the Kremlin that payment for gas in roubles would be required from midnight. Russia has threatened to cut off supplies of gas to those “unfriendly” countries who do not pay in in this way.

GB baseload power contracts firmed a touch yesterday

GB baseload power contracts firmed a touch yesterday on a combination of firmer gas and a squeeze on the minimum supply margin. A decline in the cost of carbon EUAs put a cap on gains. The carbon market declined for the second session in a row with a further €1.40 per tonne on average coming out of contracts. The output for wind generation was expected to drop below seasonal levels today and is set to drop to just 4.6GW over further over the weekend.  Day ahead baseload power closed at £250.00/MWh, up by £15.00 while baseload power futures added just over £4.00 on average.

Crude oil markets reversed the gains from the previous session

Crude oil markets reversed the gains from the previous session as reports emerged that the U.S. administration was considering the release of 180 million barrels of oil from the Strategic Petroleum Reserve.  This action if approved would not only reduce the burden on U.S gasoline users but in some way counter the loss of Russian crude oil production.   If this move is confirmed it will represent the biggest release form the US reserve since 1974 although it will only relace about one third of the potential loss of Russian supplies. Crude oil market reacted positively to the news with the front month Brent crude contract shedding $5.14 to close at $108.31 a barrel.

Crude oil markets are relatively stable

Despite the ongoing threat to the continuity of Russian gas supplies to Western Europe the UK gas market has opened weaker this morning.  The new front month May contract is priced at 296.50p/therm, down by 2.82p from last night’s close.  The market is unsure of price direction with bid/offer spreads in excess of 10.00p on some periods at the moment.  Longer dated contracts are displaying weakness with Summer 2023 down by 3.00p/therm.  Gas continues to flow into Western Europe from Russia this morning but the risk to interruption remains.  Crude oil markets are relatively stable with Brent up by just 50 cents from last night’s close.

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