Crude oil prices reached two month high

UK gas market continued to soften on Thursday

UK gas market continued to soften on Thursday with losses evident in both NBP prompt and curve contracts. The day ahead contract shed 2.95 pence during the session to settle at 90.05p despite demand remaining above seasonal norm at 209MCM. Yesterday’s downward trend in the prompt filtered in the near curve, leading to the June the front month contact to open at 146.00 pence per therm, down 8.88p from the previous session before eventually closing at 144.85p per therm. Further along the curve contracts losses were marginal, as the front season Winter-22 settled at 236.99p down only 2.11 pence per therm. Remaining future contracts for delivery in 2023 moved in the opposite direction, with Summer-23 gaining 1.89p to settle at 172.22 pence per therm.

Near term GB baseload power futures posted only minor losses

Near term GB baseload power futures posted only minor losses as gas weakness was offset by large increases in UKA and EUA carbon allowances.  Near term gas contracts shed just over 2% in value while EUA carbon contracts firmed by over €3.00 per tonne as UKAs for 2022 finished up by £2.16 per tonne.  The power prompt weakened once again yesterday and remains at substantial discount to the front month.  The day ahead price for power settled at £101.65/MWh while the June baseload contract settled at £157.00/MWh.

Brent crude continued to trade in positive territory

Brent crude continued to trade in positive territory during Thursday’s session. Taking direction from an optimistic demand outlook as the US driving season begins, alongside the reopening of Shanghai after a two-month Covid lockdown. July the Brent front month opened the session in the $113 to $114 range, however the contract eventually settled at $117.40 a barrel. Brent crudes two month high yesterday also found support in the weakening of the US dollar, as the market considered if the US Federal Reserve might slow its tightening cycle. WTI prices followed a similar sentiment and gained 3% during the session to settled at $114.09 a barrel.

Yesterday’s losses have been sustained this morning

Yesterday’s losses have been sustained this morning, as a result the front month is currently trading at 138.00 pence per therm, down 6.45p from the previous settlement. Contracts for the remaining summer months are also feeling the pressure, down 6.45p on average. Exports to the continent are robust this morning at 96MCM while demand is in line with yesterday at 211MCM. Despite a slightly short system the Within day contract bid price is currently at 85.50p, down 6.75 pence per therm. Brent crude is trading in a range between $117 and $118 this morning while WTI front month is yet to trade.  

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