The NBP front month has opened with significant gains

13 June 2022

Friday saw mixed movement on the NBP curve

The UK gas market opened weaker following the large prices increases in the previous session when an explosion in a Texas LNG terminal caused the market to spike.  There was precious little news as to the likely duration at the LNG facility which reports have suggested at least three weeks. That said the gas market displayed none of the volatility from Thursday with prices not straying too far from previous settlement for most of the day. The front month July contract shed 4.37p to close at 146.24p with pressure from the weak prompt.  The spot settled at 23.00p while day ahead added 71.00p to close at 81.00p, still at a substantial discount to the July forward price.

GB Baseload displayed a relatively flat sentiment

The GB minimum supply margin has been quite healthy averaging 9GW over the last week.  Surplus generation is expected to expand further in the coming week as a high level of renewable generation is forecast. Prompt power prices continue to be pressured by a combination a well-supplied system and falling gas costs. Weekend power fell to £70.00/MW with the monthly index continuing to track lower at £123.89/MWh.  Contracts on the power curve did not move too far from previous settlement with the market being quite illiquid on Friday.

Demand decline fears fed into the Crude oil market

Crude oil markets traded in negative territory during the session on Friday as demand destruction fears put a break on price increases, at least for short term.  The market has been very bullish of late with prices nearing the record that was established earlier in March. Some strong economic signals from China combined with high demand in the US, as the driving season continues, and Russian supply risk have given strong support to prices.  But as gasoline prices in the US now approach $5.00 a litre there are fears that the higher price will put off users who are already grappling with rising interest rates. At market settlement the Brent crude contract was priced down by $0.88 at $122.01 a barrel.

NBP gas contracts push higher during Monday’s opening

Forecast demand for today is coming in at 215MCM with the system displaying a significant surplus of 26MCM.  LNG send out is particularly low at just 30MCM while storage withdrawals are at a similar level. Strong nominations through the Bacton Zeebrugge interconnector continue and are currently running at 93MCM. The UK gas market has opened with significant strength the front month July contract priced at 154.16p, up by7.92p. Other contracts that have traded are up by between 2.00p and 3.00p.  Crude oil contracts are trading lower with Brent for August delivery priced at $120.88, down by $1.13.
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