The cooler temperatures pushed GB gas demand
The cooler temperatures pushed GB gas demand above 355MCM yesterday, and gas prices on the NBP prompt and near curve crept higher. Lower wind generation also added to gas demand on the day and having opened with a surplus the gas system struggled to remain in balance and was showing a minor deficit in the afternoon according to the National Grid’s website. Prompt products settled an average of 12.75p higher with the spot and day ahead products adding 10.00p and 15.00p respectively. Near curve contracts reversed earlier gains in the morning but were buoyed by the gains on the prompt and January, the front month settled 10.94p up at 346.32p. The summer contract settled at 338.10p posting a gain of 8.02p.
GB baseload power futures settled mixed
GB baseload power futures settled mixed on Tuesday as the front two months bucked the trend and settled lower while contracts from the summer out settled higher for the most part. January closed £22.50/MWh down at £493.00/MWh while the summer contract rose by £9.00/MWh to settle at £309.00/MWh. Carbon EUAs pushed higher with the Dec-23 contract adding €1.59 per tonne. Baseload for the day ahead was boosted by forecasts for lower wind generation and settled 10.1% or £28.98/MWh higher. Supply margins are expected to tighten further as wind generation is forecast to drop again today while demand is forecast above 40.0GW.
Economic uncertainty being the main driver for a selloff
Brent settled $3.33 a barrel lower on Tuesday after a selloff with economic uncertainty being the main driver on the day. It’s the lowest settlement for Brent since 31st December 2021 and largest one day loss for the global benchmark since the last week in September. Economies across Europe have slowed due to the high energy prices and increasing interest rates. The latest data from China has showed the service sector is at a six-month low. The crude oil markets are likely to remain volatile for the near term as the U.S. and EU central banks are likely to increase interest rates again while China struggles to relax Covid-19 restrictions and there’s Russia, will they consider cutting supplies in retaliation to the price cap?
Gas prices have opened firmer
Crude oil prices have continued to tumble this morning with Brent a further $1.20 a barrel lower at $78.15 a barrel. Official government data is due to be released by the Energy Information Administration later today, but industry sources have shown a large build in U.S. reserves of distillate stocks over last week. Gas prices have opened firmer with the front month, January last trading at 360.00p, up 13.68p while the summer is 8.98p higher at 347.00p. The spot last traded at 360.00p and there are no trades recorded for the day ahead as yet. Supplies are forecast 5MCM shy of today’s demand of 363MCM.