UK gas fundamentals remained broadly positive yesterday
UK gas fundamentals remained broadly positive yesterday and the gas market was happy to release a modest amount of premium. Contracts opened weaker and extended losses over the course of the day. Trading was brisk at the front on the curve and for the most part bid/offer spreads were tight. The front month May contract settled at 233.49p/therm, down by 5.93p from the previous close. Other periods also went lower with some recently added premium on seasonal contracts being released. Norwegian flows through Langeled came in at 65MCM as the system ran in balance for much of the day. Russian gas flow into Western Europe were maintained at recent normal levels which also provided a bearish signal.
GB baseload power prices out to Winter 2022 shed premium
GB baseload power prices out to Winter 2022 shed premium in sympathy with losses on the equivalent NBP gas curve. Longer dated contract from Summer 2023 forward added further premium for multiple sessions. Losses out to the front Winter averaged just over £4.00/MWh with an increase in EUA carbon costs putting a floor on the downward movement. GB baseload prompt prices rebounded during yesterday’s session as the forecast for wind generation in the coming days was reduced. Day ahead baseload firmed by £28.00/MWh as a result.
Brent crude contract for June delivery traded back down below the $100 mark
The Brent crude contract for June delivery traded back down below the $100 mark during a brisk day of trading yesterday. This is the lowest point that crude has traded at in the last two weeks and reflects a growing concern about future demand and also the fact that recent reports suggest that the IEA will release 120million barrels from strategic reserves. Half of this will come from US reserves with the balance being provided from either IEA members. At market settlement the June Brent crude contract established a foothold above €100 market as it settled at $98.68, down by 49 cents. Upside pressure still remains especially if the EUs plan to ban all Russian oil comes into play.
UK gas contracts have opened firmer this morning
UK gas contracts have opened firmer this morning with near term periods that have traded so far up by 8.00p/therm. The market appears to be responding to a vote in the EU parliament that calls for a full ban on Russian gas, oil, and coal. While the vote is non-binding it perhaps is a portent of things to come. On the fundamental side forecast demand has reduced day on day and is predicted at 315MCM. Supplies are running in excess of demand by 10MCM and the system is quite comfortable at the moment. Crude oil markets are generally stable this morning as Brent crude trades at $101.15 a barrel, up by 43 cents from last night’s close.