The UK NBP gas curve is in retreat once again this morning

UK gas futures extended losses for the second session in a row

UK gas futures extended losses for the second session in a row with contracts for Summer delivering periods coming under significant pressure especially in the final hour of the session.  Early weakness in the market was apparent as contracts opened down by between 3.00p and 5.00p from the previous close.  Price pressure increased in the latter part of the sessions as a significant sell off started.  The May contract shed 18.00p to close at 153.39p while June experienced a loss of just under 14.00p as this contract closed at 182.42p.  The Q3 2022 contract traded lower by 10.30p at 203.19p.   The UK continues to receive record levels of LNG with a further 14 tankers due in the next two weeks.

Carbon EUAs gave up much of the premium added in the previous session

The declines in NBP futures curve fed into the baseload power futures market once again on Monday as contracts declined by between £6.00/MWh and £12.00/MWh.  Carbon EUAs gave up much of the premium added in the previous session with this market closing just under €5.00 per tonne lower. Both the EUA and UKA markets suffered losses which pressured power prices lower.   The day ahead was generally stable with the spot settling flat at £160.00/MWh.  Supply margins are expected to remain tight in the coming days as wind generation output stays at 3.5GW.

 Prices broke back below the $100 a barrel

Since the beginning of April Brent crude has traded in a range of between $100 & $110.  The market took a significant step lower during trading on Monday as prices broke back below the $100 a barrel mark as a major sell off happened in the latter part of the session.  The disruption caused by a protracted war in Ukraine is set to continue with no breakthrough in peace talks.  However, the market is now focused on China’s zero tolerance approach to covid 19 where lock downs are possibly set to extend to Beijing.  China accounts for just over 15% of global demand and the market fears significant demand destruction if covid outbreaks continue.  The Brent crude contract settled at $102.32, down by $4.33 from the previous close.

The EUA carbon market has stabilised

The UK NBP gas curve is in retreat once again this morning as premium continues to come out of contracts. The front month May contract is down by 6.89p at 146.50p/therm.  The Q3 2022 contact is down by 10.03p at 203.18p/therm. Gas demand in the UK is forecast at 277MCM with 54MCM of this being exported to continental Europe via the various interconnectors. LNG output is in excess of 108MCM which is not surprising given that a further 14 tankers are due to arrive in the UK in the next two weeks.  The EUA carbon market has stabilised with prices flat to last night’s close.  Brent crude for June delivery is priced at $101.37 a barrel.

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