The UK gas market corrected significantly lower
The UK gas market corrected significantly lower during trading on Friday even though Russia’s threat to shut off supplies was still pending. The UK NBP shed 40.00 in a sell off that began in mid-afternoon. Gas flows from Russia into Western Europe continued through two of the three main pipelines. A spokesman for the Russian government indicated that payment for current gas deliveries would not be due until the end of the month and under certain circumstance the decree could be reversed. The announcement saw premium that had built up in the previous four sessions fall out of the market. The new May front month contract settled at 257.32p, down by 42.00p while winter 2022 shed 32.87p.
GB baseload power curve fell on Friday
The GB baseload power curve fell on Friday as the threat to Russian gas supplies into Western Europe failed to materialise. Putin’s demand that energy supplies be paid for in Roubles remains but there has been no disruption to gas supplies as of yet. A sell off on gas contract fed directly into the power curve with contracts out to Winter 2023 falling by over £24.00/MWh.
The forecast for wind generation for this week improved with 8.75GW due on the system. The minimum supply margin widened considerably and day ahead power eased as a result. The power prompt finished at £240.00/MWh, down by £10.00.
Front month status switched to the June
Front month status switched to the June Brent crude contract on Friday as May expired for the last time on the previous day. Brent for June delivery traded in a range of $106.24 to $102.35 with its high just a touch below where May finally finished. The news that the US intend to release significant amount of crude oil from their Strategic Petroleum reserve has given the market the confidence to go lower. Movement on the June contract was relatively minor although the key factor was that June remained stable during the day and there was real effort to recover the premium lost in the previous session.
The gas market has held on to the losses from Friday
The gas market has held on to the losses from Friday and despite an attempt to push higher earlier gas prices are tracking lower at present. The front month May contract is priced at 254.00p, down by 3.30p from Friday’s close. Winter 2022 is showing a gain of 2.36p but latest bid/offer spreads would suggest that the next trade will go through below last Friday’s close. The UK gas market is operating with quite a comfortable surplus as a forecast demand of 285MCM is outstripped by supplies of 297MCM. Crude oil markets are trading flat to Friday’s close with Brent priced at $104.40 per barrel.