Supply concerns fed into NBP far curve contracts
UK gas future prices continued to build in risk premium yesterday, particularly in the early hours of trading, before eroding slight from the front. September hit an intraday high of 422.05 pence per therm before scaling back to close at 401.65p up 11.83 pence from the previous settlement. However further along the curve contracts struggled to shrug off gains, Summer 23 ended the day at 453.86 pence per therm up 37.76p. Winter 23 settled at 448.91 pence per therm, an increase of 37.63p per therm. The upward momentum in future gas contracts reflected the markets uncertainty in weather current supply concerns will ease, this may lead to European demand destruction.
GB baseload power futures extend strong gains yesterday
GB baseload power futures pushed higher during yesterday’s session as prices firmed once again on the back of increases in the wider fuel mix. The largest increase was seen along the far curve with Summer 23 and Winter 23 jumping almost 8% to settle at £374.75/MWh and £384.00/MWh respectively. Baseload for the day ahead out turned higher at £310.40/MWh, up £40.69/MWh from the previous session as wind generation remains below seasonal norm. EUA carbon hit a six week high during yesterday’s session, with the EUA spot edging up €1.64 to settle at €87.17/tonne.
Strong global oil demand outlook supported Brent crude prices yesterday
The International Energy Agency announced on Thursday that global crude oil demand was set to increase by 2.1 million barrels per day this year. This fed into an upward sentiment in oil benchmarks, despite OPEC cutting its demand forecast by 260,000 barrels per day. The forecasted uptick in oil demand has been triggered by fuel switch from gas to oil for electricity generation, particularly in Europe where gas prices have rallied. At market settlement the Brent crude front month contract had gained $2.20 to close at $99.60 a barrel while the US benchmark, WTI was up by $2.41 to $94.34 a barrel. Supply concerns also eased as southern flows returned on the Russian to Europe Druzhba pipeline. The US dollar also extended it losses for the second consecutive day which helped boost oil markets.
UK gas prices have started the day in negative territory
UK gas prices have opened the session in negative territory this morning, with September the front month losing 9.46 pence to trade at 392.19 pence per therm, while October is down 6.10p at 437.20 pence per therm. Winter 22 and prompt contracts are yet to trade. The UK system is slightly undersupplied by 8MCM, while UK interconnector exports are robust at 91MCM, power station demand remains high as wind generation is low. Brent crude is currently trading just shy of the $100 per barrel mark at $99.66. WTI front month is moving in the opposite direction, down 36 cents at $93.98 a barrel.
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