UK gas futures contracts retreated yesterday
UK gas futures contracts retreated yesterday as prices softened across the curve. The front month of January experienced a decline of 16.43p to finish the day at 324.89p a therm, while further out the Summer 2023 contract shed 17.85p to settle at 317.67p a therm. The system remained undersupplied throughout the session by as much as 14.00MCM as the low temperatures increased demand for heating. However healthy storage and robust LNG deliveries, have helped to pressure prompt and near-curve contracts with the day ahead contract falling another 21.19p yesterday to end the session at 331.66p a therm. An unplanned outage on the Bacton-Zeebrugge pipeline will see exports to Europe reduced by around 20MCM a day from December 14th to 16th.
GB baseload prices took direction from the NBP gas market
GB baseload prices took direction from the NBP gas market and fell for a fifth consecutive session yesterday. Once again the near-curve contracts saw the largest declines with contracts for January shedding £20.75/MWh to end the day at £338.75/MWh, while the Summer 2023 dropped £15.50/MWh at settle at £287.00/MWh. Wind generation forecasts for the remainder of this week have been revised up and should exceed seasonal averages next week as temperatures are set to return to normal levels. The day ahead contract pushed higher to settle at £355.49 a rise of £8.36/MWh.
West Texas Intermediate gained
Brent crude futures prices rose for a third consecutive session yesterday as economic confidence mounts in the key US and Chinese markets. Both the OPEC and International Energy Agency (IEA) now forecast US demand to rebound in 2023 alongside a slowing American inflation rate. The IEA are also forecasting a Chinese oil demand recovery in 20233 following a contraction of 400,000 barrels a day in 2022. Contracts for the front month of February pushed another $2.02 higher to settle at $82.70 a barrel. West Texas Intermediate also gained, adding $1.87 to finish at $77.31 a barrel.
Near-curve contracts recovering some of the losses from yesterday
The UK gas market has opened firmer this morning with near-curve contracts recovering some of the losses from yesterday, although several contracts are yet to trade. The contract for January is currently trading at 331.68p a therm, up 6.79p and Summer 2023 stands at 324.00p a therm up by 3.66p. On the prompt, the within day has traded at 340.00p a therm, up 3.85p on yesterday while the day ahead has yet to trade. The UK system has opened with supply broadly meeting demand at 368.8MCM. Brent crude has slipped slightly and is currently trading at $82.49 a barrel. EUA carbon remains under pressure with the December 2022 contract last trading at €86.12 a tonne a decline of 49 cent.