Near futures on the NBP curve surged higher later in the session

News emerged that Gazprom had cut capacity on the Nord Stream 1

Near futures on the NBP curved opened with gains of around 10.00p on Tuesday but prices surged higher later in the session as news emerged that Gazprom had cut capacity on the Nord Stream 1 pipeline by around 40% to 100MCM.  The Russian state-owned gas giant is blaming sanctions on prohibiting the return of parts like turbines and compressors which were sent overseas for maintenance.  Supply woes took a further hit with news that the Freeport LNG plant extended its shutdown to three months after last weeks fire.  The July contract on the NBP settled at 196.55p, adding 42.84p on the day. The front winter contract settled 28.64p higher at 270.89p. Prompt prices gained an average of 24.00p yesterday.

 Baseload futures tracked the gains in the NBP futures market on Tuesday

Baseload futures tracked the gains in the NBP futures market on Tuesday.  The July contract added £28.00/MWh to settle at £190.50/MWh while the front winter contract closed at £261.75/MWh, up £17.25/MWh.  Carbon EUAs reversed losses from the previous days as the spot price increased to €83.66 per tonne, gaining €2.28 per tonne yesterday. The day ahead contract settled £3.28/MWh higher yesterday as wind generation remained below 2.0GW on Tuesday and is forecast to remain below 1.5GW for today.  Gas fired generation remained the dominant source in the UK power stack contributing around 16.4GW or 52.5% of supplies.

 The early gains in crude oil prices were reversed by the close of play

The early gains in crude oil prices were reversed by the close of play yesterday as the markets are wary of the U.S. Fed increasing interest rates by more than expected in response to latest CPI data.  Today is the second day of discussions for Federal Reserve officials and the market widely expects the next interest rate hike to be 0.5%.  Supply concerns have supported crude oil prices lately and in the latest monthly report from OPEC, the group kept to its forecast that global oil demand for 2022 will exceed pre-pandemic levels but added the caveats that the Russian war with Ukraine and the Covid-19 virus still pose a risk to the recovery.  At the market close, Brent settled at $121.17 a barrel down $1.10 a barrel.

The UK gas system has opened with a deficit again this morning

NBP futures have opened firmer by up to 14.00p this morning although latest trades for the front months are almost flat to last night’s close. The front month peaked at 210.26p earlier but last exchanged at 196.75p.  Trading for the prompt has been thin with the bid/ offer spreads suggesting that the market will move higher.  The UK gas system has opened with a deficit again this morning although Langeled nominations for today are higher at 50MCM.  In the crude oil markets, both benchmarks are over a dollar lower with Brent last trading at $119.98 a barrel.  

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