NBP curve prices are shedding value this morning

06 May 2022

The UK NBP curve extended gains for the second session in a row with price

The UK NBP curve extended gains for the second session in a row with price pressure evident from the outset. The June contract gained 7.80 pence per therm yesterday while the bellwether Winter-22 contract increased by 12.21 pence per therm to close 251.12pence per them. The market continues to fret about the potential interruption to gas supplies from Russian and risk premium grows. Across the curve prices closed by just under 9.00p/therm on average. The supply /demand balance in the UK remains positive and the outlook is for it to continue for the next number of weeks. Five LNG cargos are expected to arrive at UK ports in the coming week with much of this to be exported to continental Europe via the various interconnectors.

The day ahead baseload power contract continues to weaken

GGB baseload power futures continued to rally on Thursday in line with the rest of the energy complex.  Natural gas contracts extended gains for the second session in a row and this along with increases in carbon prices fed into the power market.  The front month gained £3.25 but other contracts were up by £7.50/MWh. The baseload prompt continues to be relatively weak as wind generation levels are forecast to increase to 6.8GW. The day ahead contract fell by over £14.00 and settle at £141.50/MWh. Weekend power also weakened and is priced at £140.50/MWh.

Crude oil markets racked up a third day of gains yesterday

Brent crude prices continued their upward trajectory during Thursday’s session, as the market continued to react to the potential ban on Russian oil. Yesterday’s decision by OPEC+ to maintain production at 432,000 barrel a day in June reflected the fact that China’s oil demand is slowing down as covid related lockdowns continue. Gains in the crude oil market where capped by the US Fed announcement of a hike in interest which we have not seen since 2000. The increased cost of borrowing is likely to seep into weaker demand for oil. Like the wider energy complex, oil prices remain in backwardation as the spread between Dec-22 contract and Dec-23 is now over $13 a barrel per barrel. At final settlement, the Brent crude contract for June delivery was up by 76 cents at $110.90 a barrel.

The front month June gas contract is down

The gas market has opened weaker this morning and a sell off is evident at the moment. The front month June gas contract is down by 16.99p which is more than the premium added in the last two sessions. Winter 2022 is also showing some weakness and is priced at 244.00p, down by 7.12p in early trading. The sentiment in the gas market appears to be changing although some of the recently added premium remains. Crude oil markets are trending up this morning and the Brent crude contract has already added $2.43 as it trades at $113.33 a barrel.
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