Upward sentiment in the NBP prompt filters into the curve

03 November 2022

renewable energy management

 UK gas futures reverse losses and make modest gains yesterday

UK gas future contracts reversed their losses from the previous two session to end the day with modest gains. A strong uptick in the prompt market due to weather fundamentals filtered into the curve yesterday, highlighting the hypersensitivity future contract face this winter with slight changes in fundamentals having a considerable impact on prices. The front month contract December gained 25.75p to settle at 305.44p per therm while Q1 23 ended the session at 345.17p up 24.20p per therm. Movement was mixed in the wider energy complex, as Brent Crude settled $1.51 higher at $96.16 a barrel while EUA carbon spot shed €2.80 to close at €74.15 a tonne.

GB Baseload power curve contracts track the uptick in the UK gas market

GB baseload future products tracked the upward sentiment in the NBP gas market during yesterday session, with the front of the curve taking the main brunt of the gains. The front month reversed losses from the previous two session to settle at £328.25/MWh, up £28.75/MWh on the day. Baseload for the day ahead remained stable during yesterday’s session despite forecasts for wind generation dropping back in line with seasonal norm at 6.9 GW. The day ahead contract settled £1.06/MWh higher at £95.56/MWh.

Oil benchmarks extend gains, as US crude inventories decline

Global oil benchmarks extended their recent gains during Wednesday’s session, as declining US crude inventories signalled robust demand while media sources suggested China may ease its Covid-19 restrictions. Brent Crude front month peaked at $96.45 before scaling back to end the day up $1.51 at $96.16 a barrel while the WTI equivalent settled at $90.00 a barrel. The market maintained the upward sentiment despite the US Federal Reserve interest rate hike, which brings the new rate to 4% overall, the highest rate since the start of 2008. A rising US dollar following the interest rate hike was also shrugged off by the oil market, as it focused primarily on the supply and demand outlook.

UK gas future contracts continue their upward trajectory this morning

UK spot market has picked up where it left of yesterday, making modest gains of 64.95 pence per therm. The NBP Day ahead is currently trading at a 22.00p per therm premium to the TTF Day ahead for the first time since February. The upward trajectory in the prompt has extended into the near curve, with the front month December currently trading at 333.66p, up 28.22 pence per therm. Economic fears have creeped back into the Brent Crude market this morning, as the latest data from China indicates their service sector has contracted for the second month in a row. Brent crude front month is currently trading at $95.10 a barrel, down $1.06.
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