Significant volatility main feature on the UK NBP gas market
Significant volatility and price increases were the main feature on the UK NBP gas market yesterday as for a second session in a row, contracts continued on an upward trajectory. Sentiment remains broadly pessimistic as the market continues to focus on supply threats. The maintenance programme continues on Nord Stream 1, and this has added a considerable upside to energy markets with fears as to whether this important asset will return to the market on schedule. The supply interruption on the North Sea Sleipner field continues for a second but remains on schedule to return on Friday. An initial 55.00p gain on the front month was halved by settlement with average gains out to Winter 2022 coming in at just over 15.00p.
The GB power market continued to be bullish
The GB power market continued to be bullish as supply threats provided the main pricing signal. In addition, low wind availability and an expected surge in cooling demand added to the overall strength of the prompt market Some relief came from the EUA carbon market where prices were down by over €2.23 per tonne across all periods. Day ahead baseload power increased by just under £25.00 with the contract settling at £291.00/MWh. Across the baseload power curve all contracts finished higher although well off their intraday highs.
Brent crude market remained volatile in the early hours of yesterday’s session
Brent crude market remained volatile in the early hours of yesterday’s session, as the commodity fluctuated between the $100 mark, before eventually settling marginally up $0.08 at $99.57 per barrel. US crude inventories rose by 3.3 million last week despite the market expecting a drop, while American demand slipped to its lowest level since June 2021, despite these fundamentals moving in opposite directions the market remains driven by sentiment. All eyes are now on the possibility of a rate hike by the US Federal Reserve which has the potential to curb oil demand. The US dollar is also adding downward pressure to the market, hitting a 20 year high yesterday, making oil purchasing more expensive for non US buyers
The UK gas system is delicately balanced this morning
The UK gas system is delicately balanced this morning with forecast demand exactly matching supply. Gas demand for today is coming in at 214MCM which is 6MCM up on yesterday’s figure. The supply mix is broadly similar to recent days with both interconnectors in export mode. Early trading on the UK NBP is below last night’s settlement with the front month August contract down by 10.43p at 259.30p/therm. The September contract and Winter 2022 are the only other contracts that are being actively traded and are displaying losses of 12.68p and 3.76p, respectively. Crude oil remains under pressure with dollar strength a key issue.