Bearish sentiment continues in UK gas market

05 October 2022

UK gas prices push lower for the fourth consecutive session

The recent bearish sentiment in UK gas futures continued during yesterday’s session, as contracts ended the day lower for the fourth consecutive session. However, the downturn in prices was more modest compared to previous session. Contracts for November delivery shed 18.87p to settle at 278.62 pence per therm while the Summer-23 contract pushed lower by 17.24p to end the session at 363.58 pence per therm. Losses in the prompt market were more significant, taking direction from healthy Norwegian supplies and robust LNG send out. In the wider energy complex, prices edged higher. Brent crude front month surpassed the $90 a barrel mark and the EUA Dec 22 contract gained €1.66 to settle at €67.42 a tonne.

GB baseload contracts edge lower

GB baseload power curve contract took a further step lower on Tuesday, as power prices settled lower for the third consecutive session. The front month contract November settled at £493.00/MWh, down £121.50/MWh over the last five days of trading. Losses were modest further along the curve, Winter-23 settled at £320.50/MWh, down £4.00/MWh on the day. Baseload for the day ahead extended its losses yesterday, down £40.69/MWh on the day at £127.20/MWh. Robust wind generation and healthy supply of gas has suppressed an uptick in the day ahead baseload contract so far this month.

Brent crude prices break the $90 a barrel mark

Brent crude surpassed the $90 a barrel mark during Tuesday’s session, with the front month contract ending the day at $91.80, up $2.94 a barrel. Oil prices continue to track market speculation of a significant OPEC+ oil output curtailment, which will be discussed at the oil cartels meeting in Vienna on Wednesday. OPEC+ have continued to miss monthly production targets, the group were short 3.6 million barrels per day in August, therefore a reduction in output would add an additional squeeze on an already tight system. More details have emerged regarding the G7 price cap on Russian oil exports which supported the upward momentum in the oil market. A two phase ban will be imposed, one focusing on Russian oil and the second phase focusing on diesel.

NBP gas contacts open higher

UK gas futures have opened fractionally higher this morning, with the front month up 4.48p at 283.10 pence per therm. However liquidity is thin and seasonal contracts are yet to trade. The day ahead contract has took a major step lower this morning, last trading at 80.00 pence per therm, a price not seen since early June. The UK system has opened 17MCM undersupplied, however the knock on effect of this in market prices is not clear as the spot product is yet to trade. Brent crude prices remain marginally in line with yesterday, as the market awaits the outcome of today’s OPEC+ meeting in Vienna to discuss output curtailments.
Read more carbon market news in our Insights section.