The market has been very focussed on potential supply risks
Following multiple sessions of strong gains, the UK NBP market took a pause for breath on Friday. It was not all plain sailing however as the softer opening was soon retraced as trading ramped up. The market has been very focused on potential supply risks with the onset of annual maintenance on the North Stream 1 pipeline the latest event to cause considerable anxiety. News that a vital turbine which had been blocked but sanctions was en route, was enough to give the market the impetus to track lower. The front month August contract settled at 255.52p, down by 42.80p but still up by 15.00p over the course of the week. Seasonal contracts out to Winter 2022 were down by 23.53p on average.
GB baseload power market experienced significant volatility in the last week
The GB baseload power market experienced significant volatility in the last week with contract for the most part posting significant gains. On Friday, the power curve fell for the first time along with underlying gas prices as news emerged that Nord Stream 1 maintenance could proceed without an extended interruption. An important turbine is expected to be delivered on time. The front month September baseload power contract fell by £46.50 to close at £252.00/MWh. Bothe the August and September contracts gave up premium of £29.46 and £20.30, respectively. On the prompt the day ahead firmed while weekend prices went lower.
Global crude oil market posted gains for a second session in a row
Global crude oil market posted gains for a second session in a row as the market was once again looking to the supply side for direction. Earlier in the week the market was very much fixated on the potential for a global recession with the inevitable knock on for oil demand. Prices dropped by a combined $13.00 for two sessions but including Friday the market has recovered $6.00 of this loss. Adding to the upside is the fact the U.S. consumer demand for gasoline has peaked at its highest point since mid-March and as a result stocks have fallen. In addition, the spread between Brent and WTI has widened in recent sessions as Brent settled $107.02, up by $2.37 while WTI settled at $104.79.
The downward correction on the UK NBP market continues this morning
The downward correction on the UK NBP market continues this morning with the both the August and September contracts under pressure. August went briefly to a low of 219.00p but has recovered some of these losses but is still marked down by 20.52p at 235.00p per therm. Bid/offer spreads on the September contract would suggest that opening trades will be lower than Friday’s settlement. Maintenance on the Nord Stream 1 pipeline commences today but the market is much more bullish about the scheduled return date following the release of a key turbine from Canada. Brent crude is priced at $106.24, down by 78 cents from Friday.