UK gas prices continued to soften on Friday
UK gas prices continued to soften on Friday with both prompt and future markets ended the session with substantial losses. The front month October lost 74.32 pence per therm to settle at 409.42p per therm, while the front seasonal contract Winter 22 settled at 525.33 pence, down 70.41p per therm on the day. Friday’s market movement highlighted the substantial risk premiums built into the gas market over recent months, as price movements are more reflective of global pressure rather than of sentiment. UK prompt prices hit their lowest level since mid-June with the spot and day ahead settling at 131.05p and 130.05p respectively.
GB baseload futures posted heavy losses during Friday’s session
GB baseload futures posted heavy losses during Friday’s session, with the downturn in the UK gas market feeding into the bearish sentiment. Near curve contracts displayed the most significant losses, with contracts for the remaining months of 2022 losing £72.15/MWh on average. October the front month settled at £420.00/MWh down £65.40/MWh on the day. Baseload for the day ahead lost £51.20/MWh to settle at £290.00/MWh as wind generation is forecast slightly higher on Monday. Carbon EUA’s continued their decline on Friday, with the spot contract posted a loss of €2.88 a tonne to settle at €77.39 a tonne.
Global oil markets settled marginally higher on Friday
Global oil markets settled marginally higher on Friday, as OPEC+ anticipated output cuts support the market. Brent crude font month closed at 66 cents a barrel up at $93.02 a barrel. However, the commodity has posted a significant loss of $7.97 over the week. The oil cartel OPEC+ are expected to announce a modest cut in production to bring targets more in line with current output as the group continue to miss their monthly production targets. Nonetheless global economic concerns continue to hinder demand upside, as China battles with Covid-19 lockdowns and Europe’s fears of demand destruction intensify.
UK has market has opened higher this morning
The UK has market has opened higher this morning, as a result of the indefinite suspension of Russian flows into Europe via Nord Stream 1 which has been running at only 20% capacity since late July. The front month contract October is trading at 527.00 pence per therm, up 117.58p from Friday’s session while the front season, Winter 22 is up 146.67 pence at 672.00p per therm. Brent crude contracts are also up this morning as the long-anticipated OPEC+ meeting to discuss production cuts is scheduled for today. The front month Brent contract is trading at $95.57 a barrel. up $2.55 from Friday’s session.