UK prompt market plummeted
UK gas future contracts continued to unload risk premium for the fourth consecutive session yesterday, as selling pressure mounts for the front month contract. The November contract has lost 84.70p on average over the last five days of trading and settled at 201.50p per therm yesterday. The bearish sentiment was less pronounced further along the curve as a sense of uncertainty remains, Summer 24 settled 16.90p down at 253.60 pence per therm. UK prompt market plummeted, with the Within day and Day ahead contract settling at 31.05p and 18.05p per therm respectively. The Dutch TTF Day ahead saw a contradictory move, settling at 179.67p, a premium of 161.62p per therm compared to UK equivalent.
Heavy losses sustained across future contracts
GB baseload power contracts track the UK gas market during yesterday’s session, with heavy losses sustained across future contracts. The November contract took the main brunt of the downward pressure, settling £57.50/MWh down yesterday at £275.50/MWh. Summer-23 settled at 274.75/MWh a price not seen since later July. GB baseload for day ahead delivery hit its lowest level since May 2021 yesterday, settling at £63.92/MWh. The same contract reached a record high of £555.38/MWh on the 26th of August. The collapse in the contract reflects the downward sentiment in the NBP gas prompt market.
Brent crude slipped below the $90 a barrel
Brent crude slipped below the $90 a barrel mark during yesterday’s volatile session as demand factors weighed on the market. Brent crude front month gained marginally in the open hours of trading, peaking at $92.65 a barrel. However, weakness in the market arose in the afternoon as talks regarding the release of additional barrels from the U.S Reserve began to circulate. Further pressure also appeared from China, where the government has delayed the release of Q3 GDP data. Brent crude front month eventually settled at $90.03 a barrel, down $1.59 while the WTI equivalent settled at $82.82 a barrel.
Liquidity is thin this morning
NBP front month contract has opened 8.50p per therm lower this morning and is currently trading at 193.00p. However, liquidity is thin this morning, with remaining future contracts yet to trade. The UK system has opened slightly oversupplied by 14MCM as lower gas for power demand is supporting the system. UK gas demand is forecast at 247MCM today, with IUK exports nominated at 54MCM. Brent crude front month is currently trading at $90.29 a barrel, a 26 cent increase compared to yesterdays close while EUA Dec 22 contract is at €70.61 a tonne, up 42 cent.