Gas prices trended lower over the course of the day
UK NBP gas contracts made a valiant attempt to recover recently lost premium as prices firmed on opening. Early gains on contracts of 8.00p on contracts out to Winter 2022 were not sustained as prices trended lower over the course of the day. While all periods save for the front month settled higher, the market failed to recover all the premium lost in the previous session. Further out in the seasons both Summer 2023 and Winter 2023 continued to build premium as incentives for storage injections remain. Near term gas demand decreased marginally day on day as the outlook for warmer weather improved. There was some reduction in LNG flows as the South Hook terminal moved into scheduled maintenance.
GB baseload power curve recovered some of the losses from the previous session
The GB baseload power curve recovered some of the losses from the previous session on higher gas and EUA carbon costs. The gas market ticked higher yesterday for all periods save for the front month. Gas led increases combined with higher carbon costs to drive premium in the power curve. While the May baseload contracts declined by £0.50 the rest of the curve added £3.44/MWh on average. Wind generation continues to perform stronger than forecast and this pressured the prompt. Day ahead baseload power closed at £192.750/MWh, down by £2.50 on the day.
Crude oil market recovered all the losses from the previous session
The crude oil market recovered all the losses from the previous session during trading yesterday as prices responded to several bullish factors. The easing of covid 19 restrictions in Shanghai gave support to the market with the possibility of Chinese oil demand picking up from here. The EU continues to draft proposals on further sanctions on Russian oil, yet OPEC has warned once again that they will be unable to fill the void if these sanctions materialise. OPEC’s relationship with Russia further complicates this issue. The Brent crude contract traded to a high point of $105.60 and settled quite closes to this high point as it finished up by $6.16 at $104.64 a barrel.
Gas contracts across the curve have opened higher this morning
Gas contracts across the curve have opened higher this morning and Summer delivering periods are trending up by between 1.00p and 2.00p. Longer dated contracts have yet to trade but and current bid/offer spreads are quite wide, so it is difficult to predict price direction at this stage. Forecast gas demand has increased to 341MCM and the system is displaying a deficit of 15MCM. Strong exports are the main reason for the increase in demand as the UK continues to export significant volumes to continental Europe. Power station demand remains strong and is coming in at 75MCM. Crude oil markets are trading relatively flat this morning with Brent priced at $105.00 a barrel.