Crude oil prices fell sharply as fears of a global recession grow

European prompt prices continued their divergence during Thursday’s session

European prompt prices continued their divergence during Thursday’s session, with NBP Day ahead settling at 160.13 pence per therm while the Dutch equivalent at the TTF gas hub settled at 359.99p. Ample LNG supply is the primary reason behind the UK discount, due to robust regasification capacity compared to its European neighbours. Near curve contracts ended the day marginally up, August the front month gained 3.48p while September added 3.46p to settle at 316.78 pence per therm. However further along the curve, the bullish sentiment was clear, Q4-22 climbed 15.61p to settle at 374.92p while Winter-22 ended the session at 373.31p, 14.37p up day on day.

 Gains in carbon and gas futures boosted the GB baseload power curve

Gains in carbon and gas futures boosted the GB baseload power curve on Thursday when all contracts save for the front month settled higher. The July contract which expired yesterday eased by £3.00/MWh in reaction to a drop in prompt prices while near futures including the winter, settled an average of £8.70/MWh higher. Wind generation is forecast to remain low for the remainder of the week but should outturn higher than Thursday’s levels.  Baseload for the day ahead reversed the previous days gains to settle at £208.84/MWh, down almost 20.0% on the previous close.

The U.S. stock markets took a dive yesterday

Crude oil prices fell sharpy on Thursday as fears of a global recession grow.  OPEC+ concluded its meeting yesterday and as expected agreed to adhere to its current output strategy for next month. The group confirmed it would increase output by 648,000 barrels per day for August as previously agreed but would not be drawn on policy for September. The U.S. stock markets took a dive yesterday too while the dollar strengthened which also weighed on crude oil prices. In Norway, offshore workers are planning strike action next week which could cut Norway’s production by up to 4.0%. Brent for August delivery settled $1.45 a barrel lower but the more active September contract shed $3.42 to close at $109.03 a barrel.

 Gas markets in the UK are a bit muted this morning

The gas markets in the UK are a bit muted this morning with the only activity being focused on the front two months.  August had opened firmer but the latest trade is 2.53p down on last night’s close at 245.75p.  September has declined by 1.78p to 315.00p.  The prompt market could open either way as the bid and offer prices for the spot and day ahead are wide.  The GB gas system is comfortable this morning with the demand forecast at 218MCM while supplies are forecast slightly long. In the crude oil markets, the September contract for Brent is $1.80 a barrel down at $110.84 a barrel.

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