Another volatile session on the UK gas futures market
Another volatile session on the UK gas futures market yesterday saw prices fall from the front of the NBP curve as ample supply and demand destruction erodes risk premium. European gas hubs also plummeted as the market awaits the European Commission potential price cap announcement. The front month contract November ended the session at 232.25p, its lowest level since late May while Q1-23 lost 18.64p to close at 407.21 pence per therm. Losses further along the curve were modest in comparison, highlighting that the market remains uncertain on how long it can sustain the downward sentiment, Summer-23 shedding 6.04p to settle at 358.11p per therm. NBP prompt prices continued to fall on Monday, with the Within day and Day ahead products losing 35.00p and 21.55p respectively.
GB baseload near curve contracts unravelled
GB baseload near curve contracts unravelled heavy risk premiums during yesterday’s session, as short-term fundamentals remain healthy. However, losses were fractional further along the curve as the overriding sentiment remains uncertain. The front month contract dropped £38.50/MWh to settle at £333.00/MWh, down £151.50/MWh over the last five days of trading. Baseload for day ahead delivery ended yesterday’s session at £145.00/MWh, up £15.00/MWh on the day as the contract took direction from unseasonably low wind output forecast. EUA spot price took a step back on Monday, settling at €67.10 a tonne, down 65 cents.
Crude oil markets stayed relatively stable
Crude oil markets stayed relatively stable during Monday’s session as the market equilibrium remains balanced. Concerns over tight supplies have been counterbalanced with recession fears. China’s central bank rolled out liquidity instruments on Monday, to enhance their economy and in turn increase oil demand in the world’s second largest economy. However, the upward momentum was restrained by a weakening in the US dollar, as a weaker dollar makes oil more affordable for buyers in other currencies. Brent crude for delivery in December peaked at $93.21, before settling at $91.61, up 1 cent a barrel on the day while US West Texas Intermediate gained 86 cents to end the day at $86.32 a barrel.
The downward moment in the prompt has filtered into the front month contract
NBP prompt market has tumbled this morning, with the Within day contract currently trading at 20.00 pence per therm while the balance of month contract last traded at 58.00p per therm. The downward moment in the prompt has filtered into the front month contract November, currently trading at 217.00 pence per therm, down 15.25p from yesterday’s settlement. A strong over supplied system by 30MCM due to robust LNG send out and storage withdrawals of 13MCM compared to 35MCM of injections yesterday is supporting the downward sentiment this morning. Brent crude front month is at $91.17 a barrel, down 45 cents.
18 October 2022
