EU approval of a gas price cap added to the downward pressure

20 December 2022

UK gas futures prices continued to retreat

UK gas futures prices continued to retreat on Monday reflecting the market sentiment from the end of last week. Contracts for a January delivery shed 18.35p to finish the session at 270.07p a therm while the summer 2023 contract gave up 15.03p to settle at 267.89p a therm. However, the greatest contraction was seen on the day ahead, where prices slumped 15% or 43.74p to settle at 249.99p. Contributing to this slide, was a system comfortably supplied throughout the session as temperatures climbed from last week’s lows to above seasonal averages with wind generation forecasts following suit and rising from lows earlier in the month. News of the impending EU approval of a gas price cap of €180.00/MWh, roughly 450.00p a therm, also added to the downward pressure although the cap will not apply until early February.  

 GB baseload futures prices eased

GB baseload futures prices eased considerably on Monday as both temperature and wind generation forecasts for the remainder of the week increased and now stand significantly above seasonal averages. The January contract shed £17.00/MWh to finish the day at £292.00/MWh with a similar decline of £17.25/MWh observed for the summer 2023 contract. The day ahead contract slipped £16.03/MWh to finish the session at £171.15/MWh. Carbon EUAs edged marginally higher with the spot contract closing at €83.94 a tonne a gain of 54 cent.  

 Crude oil prices crept higher yesterday

Crude oil prices crept higher yesterday after falling for two days as expectation mounts that Chinese demand will rebound in 2023. China, already the world’s largest crude oil importer is experiencing a wave of covid-19 having recently relaxed pandemic restrictions. In response Beijing has committed to support the economy and take necessary measures to boost economic growth, with a subsequent likely growth in oil demand. The US Department of Energy decision to buy oil for the Strategic Petroleum Reserve in February has also added support to prices. The front month of February ended the session up $0.76 at $79.80 a barrel.  

UK gas prices have opened lower

UK gas prices have opened lower on the contracts which have traded so far this morning. The front month of January most recently traded at 261.11 a therm a decline of 8.96p, while the Q1 contract last traded down 7.48p at 265.00p a therm. The summer 2023 contract has yet to trade. On the spot, the within day contract has traded at 210.00p a therm, a fall of 34.05p with the day ahead yet to trade. The system has opened comfortably long by 7.60MCM against a forecast demand of 375.50 MCM for the day. Crude oil for a February delivery has extended gains so far this morning, most recently trading at $80.53 a barrel an increase of 73 cent.
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