Chinese demand concerns continued to drive the oil market

UK gas prompt prices regained the majority of the premium lost over the last two-weeks

UK gas prompt prices regained the majority of the premium lost over the last two-weeks during Monday’s session, as the day ahead hit an intraday high of 100.00p before closing at 90.05p per therm. An unplanned outage at Norway’s Kollsnes plant alongside a strong demand pull of 59MCM to Belgium via the Interconnector supported prices. The bounce back in prompt prices fed directly into the near curve, with the June front month contract gaining 23.81p to close at 172.26p per therm. Future contracts diverged from the near curve and continued to realise premium, with the final quarter of 2022 shedding 11.58 pence to close at 234.61p while the Winter contract lost 12.45p to settle at 235.55p per therm.

 Carbon markets continued to firm

Save for the front month the GB baseload power curve went lower during the session yesterday.  Gains on the June contract were in excess of £10.00 as the contract was pressured by a resurgent prompt market. June eventually settled at £178.38/MWh up by £10.88 from the previous close. Power futures from July onwards all went lower with losses averaging £4.50.  These losses came despite increases in the EUA carbon and crude oil markets. Carbon markets continued to firm with the spot reaching €89.33 per tonne and remaining contracts adding €1.80 per tonne.

 The Brent crude market opened relatively stable

The Brent crude market opened relatively stable during Monday’s session at $111.67 a barrel, up 12 cents from the previous close. Chinese demand concerns continued to drive the oil market, recent data from the Chinese National Bureau of Statistics data highlighted a 10.5% slump in its crude throughput. Despite this, there was some optimism surrounding Shanghai’s plan to reopen, a sign that Covid restrictions are easing in the country. In the afternoon oil prices found some support in the EU’s meeting to discuss the joint effort to introduce a phased embargo on Russian oil by its member states.  The Brent front month closed at $114.24 a barrel, up $2.69 from the previous close, while the WTI June contract closed at $114.20.

 The EUA carbon market opened in positive territory

The NBP near curve has continued to gain value this morning, with the front month up 14.80p at 185.90p per therm while contracts further along the curve move in the opposite direction with Winter-22 down 13.00p. While prompt prices have yet to trade current bid/offer would suggest prices similar to yesterday. UK gas demand is in line with yesterday at 225MCM this morning and healthy supply flows from Norway and the UKCS of 179MCM leaving the system balanced. The EUA carbon market opened in positive territory, trading up €1.13 a tonne from yesterday’s close at €90.70 while the Brent crude front month is relatively flat at $114.35.

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