Energy Markets surge higher

UK NBP gas futures opened with a significant gap up

UK NBP gas futures opened with a significant gap up on Monday morning and gains were extended throughout the session.  The front month August contract traded to a high point of 292.30/therm before easing by a modest amount to settle at 282.84p, up by 43.38p from the previous close. Forward contracts out to Winter 2022 posted significant gains of 34.00p with prompt contracts following suit. The market has been driven higher by multiple supply threats with the latest news emerging that Russia was moving to take over Sakhalin 2 oil and gas project. This project is a joint venture between Shell, Gazprom and Japan’s Mitsui and supplies 4% of global LNG demand.

The GB baseload power market surged significantly higher

The GB baseload power market surged significantly higher during yesterday’s session as risk premium associated with numerous gas supply disruptions built up. Multiple threats to supply have emerged in recent weeks with Russia ramping up threats to stop gas flows. the front month August contract settled at £265.50/MWh up by £33.50 from the previous session. Power contracts out to Winter 2022 added just over £20.00 on average.  Key power fundamentals in the UK remain positive with plenty of renewable generation.  The supply margin remains wide with demand destruction becoming an issue.

Crude oil markets rallied once again yesterday

Crude oil markets rallied once again yesterday as tight supply concerns outweighed worries that the world as heading to economic recession.  The recent announcement by OPEC that it would increase production to counter the loss of Russian supply failed to give the market any comfort.  The group was notably coy on its production plans for September, and this failed to convince the market and only served to heighten concerns.  The prospect of a strike at Norwegian oil fields has added to the general negative sentiment around crude oil supply.  The Brent crude contract gained for the second session in a row with $1.87 added.

The UK market continues to surge higher

The UK market continues to surge higher with contracts across the curve adding further premium. Negative sentiment pervades the market as supply worries mount. The front month August contract has added 30.46p/therm in early trading and is priced at 312.70p.  Pressure is being exerted on all other periods with price increased in a range of 15.00p to 25.00p.  The gas prompt is not active at the moment with no trades going through thus far. Scheduled maintenance continues on a number of North Sea gas assets although there has been no impact of gas supplies.  Forecasts for today are coming in a 217MCM and the system is in balance at the moment.

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