Demand is expected to ease while LNG supplies are topped up

There were further declines on the GB gas markets on Thursday

There were further declines on the GB gas markets on Thursday with both the prompt and near curve relinquishing premium as demand is expected to ease while LNG supplies are topped up.  Temperatures are expected to rise above the seasonal norm next week while forecasts for an increase in wind generation should take some pressure from GB gas demand also.  Meanwhile, up to 12 LNG deliveries are expected at British ports by the first week in November, with reserves already ahead of levels at this time last year.  Prompt prices fell by up to 33.55p while on the curve, November shed 12.53p to settle at 281.37p, while the December contracts closed 17.97p lower.  

Carbon EUAs recovered some of the recent losses

GB baseload power futures ended the session with declines recorded across the board as the market responded to forecasts for higher temperatures and the fall in gas prices.  The front month declined by £35.00/MWh to close at £410.25/MWh but the contract for quarter 1 2023 shed over 9.0% or £75.25/MWh to settle at £725.00/MWh yesterday. Carbon EUAs recovered some of the recent losses yesterday with the spot adding €2.13 to close at €68.53 per tonne.  Baseload for the day ahead settled a touch higher with wind generation not expected to pick up until the weekend.  

Large drawn down on U.S. strategic petroleum reserves

Crude oil prices were stable on Thursday until the Energy Information Administration released the week’s inventory report which showed a large drawn down on U.S. strategic petroleum reserves and diesel stocks.  The reserves of diesel supplies fell by almost 5.0m barrels last week and stirred up the market as winter approaches.  However, the report also forecast a slowing of world oil demand for quarter 4 while demand growth for 2022 was reduced by 1.9m barrels per day from last month. Brent settled $2.12 a barrel up at $94.57 a barrel while the U.S. benchmark, West Texas Intermediate, closed at $89.11, up $1.84 a barrel.  

Gas prices have continued to decline this morning

Gas prices have continued to decline this morning with November a further 16.37p down at 265.00p.  Longer curve contracts have yet to trade but should open lower with declines more modest.  On the prompt, there is little to report on with activity focused on the weekend contract so far.  The GB gas system is forecast 21MCM long against today’s demand of 260MCM. In the crude oil markets, both Brent and WTI are moving lower with the December contract for Brent last trading at $94.06 a barrel, 51 cents down from last night’s close.  

Read more carbon market news in our Insights section