The UK NBP market took a significant turn lower during Friday’s session

 The falls on the gas futures market came about despite a recovery in prompt prices

The UK NBP market took a significant turn lower during Friday’s session and the gains posted in the first two session of the week were totally reversed. The falls on the gas futures market came about despite a recovery in prompt prices. June closed the day at 147.96p, down by a whopping 20.78p from the previous close and by over 37.00p in the last three sessions. The market was also pressured by the news that a number of countries has reached agreement regarding payment for Russian gas and the threat of interruption to Italy eased. Russian did move to stop gas flows into Finland but given the low level of supply the market viewed this as a slightly Pyrrhic act.

The EUA carbon market continues to be pressured by the EU’s decision

GB baseload power contracts at the front of the curve were pressured lower by a combination of lower corresponding gas contracts and a continuation of the sell off on EUA and UKA carbon markets.  Gas prompt weakness fed directly into near term futures which also dragged the front of the power curve lower. The EUA carbon market continues to be pressured by the EU’s decision to release allowances from the market stability reserve to pay for the exit from Russian gas supply. Overall power contract out to Summer 2023 shed just over £6.00/MWh on average.

 Oil market remained unsure as to the impact of the many competing factors

Crude oil prices climbed to a high of $113.15 a barrel and to a low of $110.52 on Friday as the market remained unsure as to the impact of the many competing factors seeking to provide direction.  As ever the ongoing discussions on the future of Russian crude oil supplies to Western Europe provides a significant element of upside risk while the easing of coronavirus related restrictions in China provides another supporting signal. Recent turbulence on global equity markets has also raised the prospect of the nature of future demand with fears of a global slowdown still present. On Friday Brent crude closed up by just 51 cents at $112.55 a barrel while in the last week prices were up by just over $5.00.

UK gas market has opened weaker this morning

The UK gas market has opened weaker this morning with June the front month trading 8.96p below Friday’s close at 139.90 pence per therm. The remaining summer contracts have also taken a further step back, down 9.36p on average. An uptick in UK gas demand has left the system 20MCM undersupplied, adding support to the day ahead contact which has gained 26.50p from Fridays close, trading at 133p per therm this morning. Commodities in the wider fuel mix have opened fractionally higher, the Brent crude contract has added 68 cents as it trades at $113.23 a barrel while EUA Dec-22 carbon contract is up 11 cents at €80.50/ tonne.

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