NBP futures retreat markedly
After posting gains for 2 consecutive sessions, UK markets retreated substantially on Friday. Prices slipped from early in the session and by the market close the front month of December had shed 28.39p to settle at 280.62p a therm. Further out the 2023 contract fell 14.84p to end the day at 304.15p a therm. The declines on Friday brought the overall movement for the week considerably lower with contracts for a December delivery slipping 55.10p or 18.32% over the week. Declines were less notable but still sustained across the curve with the 2023 contract shedding 9.34% or 29.02p during the week.
A turbulent session ends the week for GB Baseload power contracts
Friday saw a turbulent session in the GB baseload markets with declines in the front month of December and most of 2023 offset by gains for the first months of the new year. Baseload contracts for December dropped £22.50/MWh to end the day at £315.00/MWh a decline of £49.75/MWh over the week. The system was oversupplied for the session on Friday and wind generation levels exceeded the seasonal normal. The largest declines on Friday were noted on the day ahead contract which tumbled 41.18% from £170.00/MWh to end the day at £100.00/MWh. Wind generation forecasts remain above average for the coming fortnight.
Market optimism fuels surge in crude oil prices
Market optimism surrounding the Chinese economy and a potential easing of the Chinese zero-covid policy saw a dramatic rise crude oil markets on Friday. Although Chinese health officials subsequently reiterated their commitment to a stringent response to the pandemic, gains were observed across the curve and were most notable for the coming months. Contracts for a January delivery surged 4.12% or $3.90 to finish the session at $98.58 a barrel, the highest price seen since the end of August. Weak Chinese demand has been a significant factor impacting the global market and any positive news on the economy of the world’s largest oil importing country will help bolster prices.
Markets continue to push lower this morning
The declines observed in the markets on Friday have continued in early trading this morning with UK gas contracts the front month of December last trading at 280.03p a therm, a modest fall of 3p. Declines are more apparent further out with the Q1-23 contract already down 15.15p at 315.87p a therm. The system has opened balanced today with a forecast demand of 362.7 MCM as above average temperatures reduce the requirement for gas for heating. Brent crude oil for the front month of January has so far maintained its position and is unchanged on Friday’s close. Carbon prices have opened higher with the December 2022 EUA’s last trading at €74.50 a tonne, a slight increase of €0.76.