Gas trading strong as markets open

12 July 2022

NBP futures posted losses for the second day running

NBP futures posted losses for the second day running with the news that Canada was to release a compressor for Nord Stream 1 comforting the markets somewhat. Gas flows from Russia through the pipeline had been reduced to around 66MCM since mid-June as the replacement part was held up due to sanctions.  Scheduled maintenance began on the pipeline yesterday and gas flows to Germany fell to zero as a result and the markets are wary that flows may not fully return after maintenance has been completed.  The August contract on the NBP fell by 33.28p yesterday while the winter contract closed 29.46p down to 413.41p. Unplanned outages at Sleipner and Kollsnes interrupted Norwegian gas imports yesterday and boosted NBP prompt prices.

 Carbon EUAs recovered Friday’s losses

The fall on the NBP curve was replicated in the baseload power futures market for the most part yesterday.  Declines on the day were limited by increases in carbon prices however as the front month settled £1.50/MWh down at £250.50/MWh.  Carbon EUAs recovered Friday’s losses as the spot settled at €84.01 per tonne. Wind generation is forecast to increase on Tuesday but the gains on the NBP prompt supported the day ahead baseload product yesterday.  The contract settled £20.35/MWh higher at £235.00/MWh.

Crude oil prices were mixed yesterday

Crude oil prices were mixed yesterday as the markets continue to weigh tight supplies against demand deconstruction.  China is battling to mass test for a newer variant of Omicron while trying to balance lockdowns in Shanghai to avoid the disruption caused in April and May. Concerns were raised that this highly transmittable variant would mean demand will be impacted due to more restrictions on movement in Shanghai. Meanwhile the G7 leaders are to continuing to look at the possibility of a price cap for Russian oil which for the most part has been redirected to China and India since the sanctions on Russia were imposed.  Brent settled 8 cents a barrel up at $107.10 a barrel yesterday while WTI fell 70 cents to $104.09 a barrel.

The prompt has opened with sharp gains this morning

The prompt has opened with sharp gains this morning as the day ahead is 51.88p higher at 270.00p as the GB gas system is forecast to run short.  The National Grid are showing supplies 14MCM short of today’s demand of 202MCM.  The outages at Sleipner and Kollsnes which were expected to be resolved today are still unresolved as Langeled flows are down at 16MCM.  August is trading higher with the latest trade for the front month of the NBP curve at 240.00p while longer curve contracts remain dormant.  Brent has shed $2.17 a barrel on fears that China will increase restrictions on movement to curb the spread of the latest variant of the coronavirus.  
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