Upward momentum returned to the UK NBP gas market during Wednesday’s session
Upward momentum returned to the UK NBP gas market during Wednesday’s session across all future periods. Winter-22 settled at 243.13p/therm up 11.75p from the previous settlement while the front month gained 3.03p/therm which was well off the traded high point of the day. The session’s price uptick was on the back of the EU’s plan to ban imports of Russian oil. The prompt moved in the opposite direction to the futures market, with both the spot and day-ahead down by 3.50p and 4.00p, respectively. Gas for the weekend and next week shed significant premium as the outlook for demand continued to improve with the weather expected to turn warmer and LNG deliveries to remain robust.
The GB baseload futures market moved in the opposite direction to the prompt
GB baseload prompt power softened yesterday on a combination of increased wind generation output and lower prompt gas costs. The day ahead contract fell by £5.00 to close at £162.00/MWh. EUA carbon costs also declined marginally, and this too fed into the lower prompt power price. The GB baseload futures market moved in the opposite direction to the prompt with gains along the curve. Gains on the front month totalled £6.00/MWh which far exceeded the increases in gas prices. Gains across the remainder of the curve averaged £8.80/MWh.
Oil prices increased under 5% during Wednesday’s session
Oil prices increased under 5% during Wednesday’s session, taking direction from the European Union’s commitment to phase out imports of Russian oil. President von der Leyen of the EU highlighted a six-month timeframe to phase out the commodity, which will give the group time to minimise any collateral damage. As Europe continues to deprive the Russian economy, they are likely to divert their supply to Asian importers such as China and India. However, this comes with infrastructural restraints, Moscow’s single pipeline to China which accounts for 70% of Russia’s oil exports is already at maximum capacity. At market settlement the July Brent crude contract settled at $110.14 per barrel, up by $5.17.
The front month June contract is up by 6.82p in early trading
Crude oil markets have calmed down this morning following yesterday’s gains. The Brent crude contract is trading flat to last night’s close at $110.25 a barrel. It is clear that the market is still evaluating the impact of a full EU ban on Russian. The gas market has continued where it left off yesterday and premium continues to build in contracts. The front month June contract is up by 6.82p in early trading while along the curve current bid/offer spreads suggest similar price movement for other contracts. Forecast demand in the UK is coming in at 268MCM but over 34% of this gas is being exported to continental Europe.