Leaks on the Nord Stream causes pressure to UK gas Market

Winter 2022 came under similar pressure

The UK gas market experienced significant pressure throughout the session on Wednesday as prices opened high and traded briskly. News that sabotage is the presumed cause of the leaks on the Nord Stream pipelines continues to concern markets despite the fact the facilities had zero flow rates prior to the leaks. The front month of October traded as high as 346.25p with a spread of 60.60p before settling at 321.67p a therm, a gain of 66.02p on the day. Winter 2022 came under similar pressure experiencing a spread of 40.66p before settling up 59.75p at 541.15p a therm.

 The GB baseload power market surged higher

The GB baseload power market surged higher during the session yesterday as a bullish NBP gas market provided the main support. Power futures out to Winter 2022 extended gains for the second session in row with contracts adding £27.20/MWh on average in a turbulent session. While most of the gains were gas led an increase in spark spreads also fed into the mix. The Winter 2022 clean spark spread is now priced at £220.25/MWh, up by £17.00 on the day. There were also increases in the baseload for the day ahead. The contract gained £76.35/MWh to settle at £284.60/MWh as the minimum supply margin narrowed.

 Crude oil markets extended the moderate rise of the previous session

Crude oil markets extended the moderate rise of the previous session to end the day posting considerable gains on Wednesday. Evacuations in the Gulf of Mexico ahead of hurricane Ian resulted in 11% of the regions oil production roughly equating to 190,000 barrels per day of output being taken offline on Tuesday. Disruption to offshore facilities is expected to continue for the week as the Category 4 storm gradually moves east, away from the core area of UK offshore oil and gas production. Brent crude contracts for a November delivery gained $3.05 to end the session at $89.32 a barrel.

The UK NBP has opened weaker this morning

The UK NBP has opened weaker this morning and the huge premium that was added in the last two session is beginning to flow out of contracts. The front month October contract is priced at 285.00p/therm, down by 36.67p from last night’s close.  Winter 2022 is also under pressure as this contract has shed 26.15p in the last hour or so.  It would appear that the market is now less concerned about developments on the Nord Stream 1 & 2 pipeline given neither have been delivering gas into Western Europe.  Crude oil market are also in decline as the Hurricane crossing the Gulf of Mexico is downgraded to a Category 1 storm.