Pressure on the front of the curve was intense
Following two sessions of strong gains the UK NBP gas markets reversed direction yesterday and strong losses were the order of the day. The market was weaker from the outset and as trading intensified a full-blown sell-off commenced. Pressure on the front of the curve was intense with both the front month and September contracts down by over 40.00p at one stage. At market settlement July was priced at 236.82p/therm, down by 32.91p with the remainder of the curve out to Winter 2022 down by just under 15.00p. The gas prompt also saw strong losses with the spot shedding 61.70p and the day ahead contract falling to 213.25p/therm, down by 62.50p. The gas supply/demand balance remains broadly similar to recent days as the market anticipates the return of the Sleipner field.
A huge decline in NBP gas contracts fed into the GB power market
A huge decline in NBP gas contracts fed into the GB power market with futures contract moving off the record highs that were established in recent sessions. GB baseload power for August was marked down by £18.25 as the contract settled at £255.25/MWh. Pressure for exerted across the full curve with declines averaging £2.00. Day ahead baseload power declined by £18.80 to £272.20/MWh but still retains a significant amount of recently added risk premium. EUA carbon cost was generally stable on the day with only some modest movement.
Brent crude prices slumped on Thursday afternoon
Brent crude prices slumped on Thursday afternoon, as the market braces for a significant interest rate hike in the US. However, the front month crawled back towards the end of the day and settle at $99.10 a barrel, down $0.47. The commodity reached an intraday low not seen since before the Russian invasion of Ukraine, with the market continuing to price in a global recession and slowdown in demand. Renewed Covid-19 outbreaks in China has also weighed on the demand outlook which eased the pressure on oil prices. WTI front month dropped below $91.00 during the session and eventually settled at $95.78 a barrel.
The UK gas market has drifted lower this morning
The UK gas market has drifted lower this morning with August the front month trading 16.82p below Thursday close at 220.00 pence per therm. Liquidity is limited on the NBP this morning with the remaining summer months yet to trade. Downward pressure is evident on the prompt, with Day ahead trading at 197.00p down 16.25 pence per therm from yesterday’s close. This morning’s market is taking direction from the return of 53mcm from Norwegian gas field Sleipner. Commodities in the wider fuel mix have opened fractionally lower, the Brent contract had lost 15 cents as it trades at $98.95 a barrel while WTI is trading at $92.73 a barrel, down 10 cents.