Crude oil markets continued to show weakness

18 November 2022

 GB gas markets opened softer on Thursday

The GB gas markets opened softer on Thursday, but losses were eroded late in the session on speculation of a delayed restart for the Freeport LNG facility.  The front month on the NBP curve, December, opened almost 20.00p down on the previous day’s close but settled just 1.88p lower at 267.85p.  The summer contract for 2023 traded between 273.50p and 298.00p before settling flat at 285.82p.  The key LNG facility at Freeport, Texas, is out of commission since June 8th due to an explosion.  The restart at the plant has been pushed back from September and hopes were for mid-November but following the initial report on the blast released this week, a delay until January is more likely.  Prompt gas prices on the continent responded to forecasts for a cold start to December and this fed into the NBP prompt.

 Carbon prices eased on the day

The late rebound in the NBP futures provided support to GB power prices and left the baseload curve mixed yesterday.  Carbon prices eased on the day and clean spark spreads from Q1-2023 out also softened which limited gains to power prices.  The front month, December settled £10.60/MWh up at £275.60/MWh, while quarter 1 for next year eased by £2.25/MWh. Forecasts for lower wind generation provided support to the prompt yesterday. Generation from the renewable source is still expected to be higher than seasonal averages with Friday’s supply expected to top 13.0GW which should meet around 36% of demand.

 Benchmarks consolidating the losses of the previous session

The crude oil markets continued to show weakness on Thursday with both benchmarks consolidating the losses of the previous session.  Brent crude settled below the $90 a barrel mark and its lowest level since the start of October, with the January contract falling by $3.08 a barrel yesterday.  West Texas Intermediate for December delivery, settled at $81.64, down $3.95 a barrel.  Crude oil prices were pressured yesterday with fears of further interest rate hikes in the U.S. along with demand concerns in China as the number of reported Covid-19 cases rise.

Initial trades for the front month and season are lower

There was some hesitancy with the opening of the NBP futures markets this morning and prices could have gone either way, but initial trades for the front month and season are lower with December last trading at 265.00p and the summer at 280.00p.  While early declines are modest, all contracts on the curve that have traded are down by between 2.50p and 6.00p.  Activity on the prompt is absent and wide bid/ offer spreads are stalling trading, but the market looks like opening higher and the GB gas system is short this morning.  In the crude oil markets, Brent is marginally down at $89.67 a barrel this morning.
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