Russia declared it may cut oil exports in the new year

28 December 2022

The UK gas system remained short

The UK gas system remained short for much of the truncated trading session on Friday but that didn’t prevent a significant decline in prompt and near curve futures on the NBP.  Prompt prices settled well down with the day ahead closing near 160.00p while the spot shed around 25.00p.  The front of the curve continued the weeklong slide and January traded below the 200.00p mark for a brief spell before settling at 200.11p, down 26.79p from the previous session.  The remaining months of the winter all closed with a similar drop on day while contracts from the summer out recorded losses between 8.00p and 15.00p for the most part. The GB gas system was still 13MCM shy at midday with demand for the day pitched at 289MCM but is expected to ease for the holiday period.  

The GB baseload power curve continued to ease on Friday

The GB baseload power curve continued to ease on Friday as lower gas prices on the NBP curve weighed.  The front month, January, settled £13.25/MWh lower on the day and £69.00/MWh down week on week as the contract draws near expiry. Baseload futures from the summer also shed premium but losses were between £5.00 and £7.00/MWh over the shortened session. Supply margins were forecast to widen as demand eases with the increase in temperatures while wind generation picks up.  Baseload for the day ahead eased by around 25% through Friday’s trading.  

Crude oil prices finished higher on Friday

Crude oil prices finished higher on Friday and posted a second weekly gain after Russia declared it may cut oil exports in the new year in response to the proposed price cap by the G7 on Russian exports.  Moscow was flexing its muscle and claimed output may be cut by between 5 and 7% in January.  Mr Putin has already said Russian oil will not be made available to countries that implement the ban. In the U.S., a massive winter storm which could hamper supplies for several days also boosted prices on Friday.  Brent for February delivery settled at $83.92 a barrel, up $2.94 a barrel.  

Prompt prices have eased

GB gas demand is pitched at 298MCM for the day and supplies have opened long by 5MCM.  Prompt prices have eased with the day ahead down almost 10.00p, however, the spot has yet to trade.  On the curve, near NBP futures have also opened softer but latest trades for the front month are above the morning low of 182.25p at 190.00p.  February and March have also traded lower with both contracts last trading just below the 200p marker and they are the only other futures contracts to register trades so far.  In the crude oil markets, Brent is close to Friday’s close having last traded at $83.94 a barrel.  
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