Mixed movement was evident across the energy market yesterday

28 April 2022

GB gas futures market opened softer on Wednesday

The GB gas futures market opened softer on Wednesday shrugging off the threat of Russia cutting supplies in Poland and Bulgaria as the front months traded lower by between 5.00p and 10.00p. However, concerns grew over the session and the market reversed tack and losses were pared back.  Contracts past the front month ended the session 12.50p higher on average, while the May contract which is due to expire on Thursday settled 13.92p down on the day.  Prompt prices fell sharply on the day as the spot and day ahead declined by 34.00p on the back of a comfortable gas system despite planned maintenance works curbing supplies this week.

GB baseload futures settled higher for the second day running on Wednesday

The threat of Russia cutting gas supplies to Poland and Bulgaria lifted European energy prices yesterday and the GB power curve was no exception.  Gains on the day varied as the front month added £1.50/MWh while winter contract settled £12.25/MWh higher.  Carbon EUAs moved in the opposing direction as the spot settled around 1.0% down. Baseload for the day ahead gained £39.10/MWh to close at £193.00/MWh as wind generation is forecast to fall below 2.0GW on Thursday.  Wind is expected to remain below the average for the rest of the week while cooler temperatures may see supply margins tighten.

Tight supplies were a cause concern for the crude oil markets

Tight supplies were a cause concern for the crude oil markets on Wednesday as both benchmarks settled with modest gains after another choppy session.  The Energy Information Administration issued its weekly inventory report yesterday and while U.S. crude stocks increased slightly, distillate and gasoline reserves fell to their lowest level in 14 years.  A strong dollar and lockdowns in Shanghai which have curbed demand in the world’s second largest oil consumer weighed on prices earlier in the session.  China has stepped up testing in Beijing after a spike in Covid-19 cases there.  At the market close, Brent settled at $105.32 a barrel, up 33 cents, while West Texas Intermediate gains 32 cents to close at $102.02 a barrel.

The UK gas markets have opened softer this morning

The UK gas markets have opened softer this morning with near contracts down by around 15.00p to 20.00p.  The threat of Russia cutting supplies to Poland seems to have faded after Germany and Poland are close to a deal which would cut Germany’s reliance on Russian crude oil and leave the way clear for the EU to impose a ban.   The May contract last traded at 134.00p which is down 15.64p on last night’s close.  Trading on the prompt is thin with wide bid offer spreads stalling further exchanges.  In the crude oil market, Brent last traded at $105.67 up 35 cents a barrel.
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