Sell off on the UK NBP gas market continued during the session
The sell off on the UK NBP gas market continued during the session on Mondays as contracts opened weaker and then extended losses for the duration of the market. At this stage, the gains that were posted during last Thursday’s session have been completely reversed and near-term contracts remain under significant pressure. The front month shed 20.92p while the calendar 2023 contract was down by 18.19p at 345.73p. The gas prompt continues to display significant weakness with bids in the teens a feature during the day. The spot settled at 30.05p/therm while day ahead gas was changing hands at 39.05p/therm.
GB baseload power prices continued their downward trajectory
GB baseload power prices continued their downward trajectory pressured by lower gas input costs. A further increase in EUAs did provide some support, however. The front month November contract shed £28.05 to close at £225.25/MWh. A healthy supply of renewable generation combined with a reducing NBP gas contract kept a lid on prompt baseload power prices during the session. At market settlement the day ahead contract was priced at £100.50/MWh with the monthly index tracking to out-turn at £157.13/MWh. Wind output for the remainder of this week is expected to re remain 20% above the seasonal norm.
Brent crude has traded in a narrow range
Crude oil markets did not have any clear direction during trading on Monday and over the last five sessions crude oil markets have moved up by $1.64 in total. Brent crude has traded in a narrow range between $90 to $93 in recent weeks with much of the focus on the global supply demand balance. Recent cuts announced by the OPEC plus group have been spiked by the release by the U.S. of significant amount of crude from its strategic reserves. This reserve stands at about 400 million barrels which could last for up to a year if the U.S. wanted to keep pace with the OPEC cut. It is doubtful that the reserve would be allowed to run down that much, however.
Pressure being exerted on near term contracts as prompt weakness continues
The UK gas market has opened weaker once again this morning with pressure being exerted on near term contracts as prompt weakness continues. Both the spot and day ahead contracts are languishing below the 40.00p/them mark as plentiful supplies of gas are available. Mild weather across the UK and Ireland and favourable conditions for renewable generation have kept a lid on gas demand which is forecast for today at 248MCM. Exports via Moffat are running at 12MCM while 60MCM is being exported to continental Europe. Brent crude is priced at $91.13 a barrel, down by $1.13 at this stage.