GB baseload power prices recorded sharp losses

31 August 2022

NBP futures slumped by around 24% on Tuesday

NBP futures slumped by around 24% on Tuesday following the bank holiday in the UK.  Market speculators scrambled to exit positions taken at record high prices last week.  September recorded the steepest loss, settling at 449.87p, down 190.49p.  October will assume front month status on ICE from today and settled 178.43p down yesterday.  Contracts further out the curve also shed significant premium with winter-22 and summer-23 closing over 183.00p lower after a lively session.  NBP prompt prices were pulled lower by the declines on the near curve while a comfortable surplus on the GB gas system also weighed on the spot and day ahead products.  

The steep declines were on the back of a slump in NBP futures

GB baseload power prices also recorded sharp losses yesterday with the front months shedding almost £150.00/MWh.  The steep declines were on the back of a slump in NBP futures along with news that the EU commission is to discuss intervention measures to calm power markets across Europe. Talks are due to take place on 09-September and may include decoupling gas and power prices. Baseload for the day ahead eased yesterday to settle at £500.00/MWh.  Wind generation was over 3.0GW yesterday which was above average for the last week.  

Brent crude prices tumble on Tuesday

Growing concern for the potential of another global economic slowdown saw Brent crude prices tumble on Tuesday. Brent crude for the front month of October settled at $99.31 a barrel, down $5.78 while the WTI front month shed $1.42 to settle at $91.64 a barrel. Run away inflation, with most countries currently experiencing figures in double digits have led to many central banks increasing interest rates recently. Fears abound that demand will suffer from further Chinese Covid responses and an impending recession, which is seen as a likely scenario. OPEC+ members are due to meet on September 5th to discuss options to stabilise the market and might cut output.  

 NBP futures market has opened firmer this morning

After Tuesdays steep declines the NBP futures market has opened firmer this morning with October, the new front month on ICE, last trading at 542.71p. Apart from the front months nothing else has traded on the NBP curve this morning.  Prompt prices are down by around 10.00p with the day ahead last trading at 415.00p. The GB gas system is forecast long by 17MCM against todays demand of 212MCM with LNG send out up at over 35MCM while Norwegian imports are expected to reach 70MCM.  Crude oil prices have continued to slide with Brent last trading at $96.35 a barrel, down $2.96.    
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