Strong opening to near curve contracts on the NBP
The strong opening to near curve contracts on the NBP was held through the day yesterday and gains to the front months were extended later in the session. December moved 31.06p higher as traders closed out positions on the last day of trading on ICE. The upward momentum was carried into the months for the first quarter of 2023 which settled an average of 21.67p higher yesterday. Prompt prices have recorded sharp increases this week as the spot and day ahead have realigned with prices at the front curve. The spot settled 38.00p up at 326.05p yesterday with a short gas system and reduced gas flows from Norway adding support on the day. Forecasts for lower wind generation and cooler temperatures for the start of December have also added to the upside.
NBP curve propped up GB baseload futures yesterday
Higher energy prices across Europe along with gains on the NBP curve propped up GB baseload futures yesterday. December gained £29.50/MWh, to close at £326.75/MWh while the summer contract settled at £291.25/MWh adding £14.75/MWh. Carbon EUAs have increased over the last week and contracts out to 2024 settled an average of 2.6% higher yesterday. Baseload for the day ahead climbed by almost £200/MWh yesterday on low wind forecasts and gains to the NBP prompt. Wind generation is forecast to fall below 5.0GW for the next few days, which is down from an average of 12.0GW over the past week.
Gains on the day were curbed
Reports that Chinese health officials are to step up vaccinations were welcomed by the markets yesterday and crude oil prices settled mixed. Brent closed 16 cents down at $83.03 a barrel while the U.S. benchmark, West Texas Intermediate, closed at $78.20, having gained 96 cents a barrel on the day. China is to speed up the vaccination process for the elderly in efforts to ease the restrictions imposed due to its zero-Covid policies. Economic growth in the world second largest oil consumer has been eroded due to the restrictions in place to stem the virus. Gains on the day were curbed by reports that OPEC+ will not change its output strategy when they meet next week. There were rumours the group are considering cutting output to bolster prices.
Trading has been muted following yesterday’s day of gains
With January now the new front month on ICE, trading has been muted following yesterday’s day of gains. At the time of writing only January and Q1-23 had transacted, making modest gains from yesterday’s close. Both January and Q1-23 have traded at 350.00p per therm, an increase of 6.97p and 5.78p respectively. On the prompt, prices were up again despite the system being balanced with strong supply forecast for the day including nominated withdrawals from storage. Freeport LNG is expected to return to 80% production in mid-December, a possible bearish signal for the market. Crude oil prices are also making gains this morning trading at $83.75 per barrel, up from yesterdays close of $83.03.