Friday turned in another volatile day of trading for natural gas

Prompt prices settled lower on the day

Friday turned in another volatile day of trading for natural gas futures on the NBP curve.  The uncertainty in the market showed early in the morning after prices eased back having opened over 10.00p stronger and the near curve continued to trade back and forth until late in the session when prices fell sharply leaving the front month to close at 171.39p, down 17.48p day on day.  The May contract has shed 41.70p over the week and Friday’s closing price was the lowest for the contract in eight-weeks.  Prompt prices settled lower on the day despite the GB gas system opening short on Friday due to planned and unplanned maintenance works which curbed Norwegian flows.

 The declines in NBP futures curve fed into the baseload power futures

The declines in NBP futures curve fed into the baseload power futures market on Friday as contracts declined by between £6.00/MWh and £9.50/MWh.  Carbon EUAs rose sharply on the day with contracts out to 2024 closing over €2.15 per tonne higher.  The spot settled at $88.31 per tonne, up €2.08 per tonne on the day or €8.70 over the week. The day ahead product recorded its first gain in over two-weeks on Friday as the price for Monday settled at £160.18/MWh.  The supply margins are expected to tighten from Monday as wind generation falls below the average level seen in April.

 The crude oil markets ended the week over 4% lower

The crude oil markets ended the week over 4% lower as Brent fell by $1.68 a barrel on Friday to close at $106.65 a barrel.  The International Monetary Fund cut its global growth forecast earlier in the week and said it could lower forecasts further if sanctions on Russia are expanded.  The Chair of the U.S. Fed said an interest rate increase will be an agenda item for the next policy meeting in May and this sent the dollar to a two-year high on the day.  This weighed on the crude oil prices and coupled with demand concerns in China countered upward pressure from fears that the EU will expand sanctions to include imports of Russian oil imports.

Early gains to the near curve on the NBP are being pared back

Early gains to the near curve on the NBP are being pared back and reversed for some contracts this morning.  The May contract has moved off a high of 175.00p to last trade at 166.98p which is down 4.41p on Friday’s close. The spot and day ahead are trading higher despite the GB gas system being forecast to run 13MCM long today. Crude oil prices have fallen sharply this morning with Brent down by almost $5.00 a barrel.  The lockdowns in Shanghai to contain the spread of the coronavirus have moved into the fourth week and there are concerns that Beijing could follow as authorities have ordered tests on 3.45 million of the city’s population.     Find out more about our Commercial Energy Services