The UK gas market extended losses for the remainder of 2022
For the third session in a row, the UK gas market extended losses for the remainder of 2022 yesterday. Contracts for these periods fell by an average of 3.48% with contracts for a September delivery dropping 18.49p to settle at 355.14p a therm. In contrast the Summer 2023 contract posted a gain of 3.51p to settle at 371.29p. Expectation is for high demand for summer injections next year as the UK plans the reintroduction of the Rough storage facility. High temperatures coupled with low wind forecasts for the UK could see gas-for power generation supported in the coming days as demand for cooling remains high. Norwegian imports via the St Fergus terminal dropped to zero yesterday due to planned maintenance scheduled to take the rest of the month.
Carbon EUAs eased yesterday
September recorded the greatest decline on the near baseload curve on Monday as the contract shed £15.00/MWh in response to a fall in near futures on the NBP. The winter-22 contract eased for a second day on Monday but the decline like Friday was marginal. Carbon EUAs eased yesterday with the Dec-22 contract closing €2.84 down at €84.52 per tonne. Forecasts for wind generation remain low for the week ahead but are slightly higher for today and this pressured the day ahead product on Monday. An increase in solar photovoltaic output is expected this week and may compensate for the lower wind generation in the GB power stack.
Prices for Brent Crude pushed roughly 2% higher across the curve
Prices for Brent Crude pushed roughly 2% higher across the curve in trading yesterday, with the front month of October gaining $1.73 to settle at $96.65 a barrel. The price for West Texas Intermediate saw a similar gain, with the price for contracts with a September delivery settling at $90.76 up $1.75 a barrel. The positive news that the US unemployment level had fallen from 3.6% in June to 3.5% in July added to bullish sentiment in the market. Despite pump prices falling recently, US gasoline demand is still lagging compared to the same period last year. This reduction could help rebuild dwindling stockpiles, currently at the lowest level for five years.
Prompt prices have opened mixed this morning
Prompt prices have opened mixed this morning while near NBP curve futures are continuing to soften. The September contract last traded at 345.00p, down 10.14p from last night’s close and October is 13.02p lower at 392.26p. The spot is 7.95p higher as the GB gas system has opened short by 13MCM today but the latest trade for the day ahead was at 270.00p, down 1.50p. Brent for October delivery has reversed some of yesterday’s gains and is exchanging at $95.60 a barrel, down $1.05.