The front two months gas contracts oscillated between gains and losses
The front two months gas contracts oscillated between gains and losses over the course of the session on Wednesday. At market settlement both contracts were marked up by 1.94p & 1.25p respectively. A short-term outage in Norway gave the front of the curve some support. As we move through the current Summer the gas market appears to have switched its attention to longer dated contracts in 2023 and 2024. Increases on these periods continued for the fifth session in a row. The Summer 2023 contract gained by 6.10p to close at 191.11p while Winter 2023 settled at 194.77p, up by 10.15p from the previous settlement. While demand did pick up on the day the early deficit on the system was quickly resolved as LNG production ramped up.
The GB baseload prompt power price continued to fall yesterday
The GB baseload prompt power price continued to fall yesterday as forecasts for wind generation were revised higher to 6GW. Lower demand was also a factor as industrial demand goes lower in advance of the Easter holidays. The day ahead baseload contract fell to £188.50/MWh, £4.25 below the previous settlement. Price movement at the front of the power curve was modest enough with any gas led gains being offset by a reducing carbon price. Further out in the seasons risk premium continues to build as the increasing threat to Russian energy flows to Europe increases.
OPEC have once again reiterated that they will not be able to plug the gap
Crude oil markets surged further ahead during Wednesday’s session and extended gains for the second session in a row. The market has a keen eye on what the EU will do in relation to its dependence on Russian oil imports. Proposals are being discussed at a high level to reduce this dependency in light of Russia’s continued aggression in Ukraine. It is not altogether clear where replacement oil will be found and the largest supplier, OPEC have once again reiterated that they will not be able to plug the gap. Recent data from the group reveals that they have not even met the production targets for the first quarter.
Crude oil markets are slightly lower
Both the front month and June contracts have posted significant losses in early trading this morning. May is priced at 198.35p on ICE, down by 14.74p from last night’s close. Likewise, the June contract has gapped lower by 11.90p on opening as it trades at 218.50p. At this early-stage other contracts further out the curve have yet to trade. The UK gas system is well supplied this morning with forecast demand of 282MCM being outstripped by supplies by some 18MCM. The outage at the Aasta Hansteen field has been resolved and operations there have returned to normal. Crude oil markets are slightly lower with Brent priced at $107.70, down by $1.08.