UK NBP gas contracts reversed direction yesterday

Significant amount of volatility in the market

UK NBP gas contracts reversed direction yesterday and pushed higher after 4 days of retreating. The increase was most focused on the near term with the front month of November experiencing a gain of 36.99p to settle at 315.61p a therm. December saw a similar rise of 37.35p to end the session at 465.41p a therm. There was a significant amount of volatility in the market with November and December seeing an average spread of 64.73p. The decline in the spot market continued however with a further 10.00p decline to settle at 120.05p, this represents a steep fall on the October contract which expired last week at 255.91p a therm.  

GB baseload power curve ticked higher during the session on Wednesday

The GB baseload power curve ticked higher during the session on Wednesday ending a four-day losing streak.  The majority of the increase was gas led as apparent supply/demand concerns saw most NBP gas contract push higher. While both November and December baseload increased by £17.00 & £19.80 respectively these gains were limited by reducing spark spreads for the period. On the power prompt contracts continued on a downward trajectory. Mild temperatures and strong wind generation availability continue to drive prices lower.  The day head contract settled at £130.00/MWh, down by £42.00 from the previous close.

Brent crude rose for a third consecutive session

Brent crude rose for a third consecutive session yesterday as OPEC+ confirmed they would cut production by 2 million barrels per day. This is the greatest production cut announced since the height of the pandemic in April 2020 and was at the higher end of expectation. The cut in production came despite pleas from the America to pump more oil and could result in the US extending the release of reserves from the strategic Petroleum Reserve. US inventory data showed crude oil stocks fell by 1.4 million barrels compared to the previous week. Contracts for a December delivery rose $1.57 to end the session at $93.37 a barrel.  

Brent crude prices have opened marginally higher

UK gas futures opened higher this morning but have fallen back to the opening prices with limited activity and multiple contracts yet to trade. The spot has yet to trade but the day ahead has opened strong with the last trade at 155.00p up 35.95p on the closing price. The UK system is currently undersupplied by some 18.2 MCM with a GB gas demand forecast of 347MCM for the day. Brent crude prices have opened marginally higher with the front month of December trading at $93.49 a barrel as the OPEC+ announcement of a 2 million barrel a day cut continues to support prices.  

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