The markets have opened broadly higher this morning

05 January 2023

Declines in the NBP gas markets continued

The declines in the NBP gas markets continued for a third consecutive day on Wednesday, with prices retreating across the curve. Once again, high levels of LNG deliveries forecast for the UK market have maintained pressure on near-curve contracts. February the front month ended the session down 18.10p at 153.08p a therm, while the upcoming summer 2023 contract experienced a decline of 21.10p to settle at 168.61p a therm. Losses were even greater on the spot as wind generation and temperature forecasts remain unseasonably high for the rest of the week and the week ahead, thus reducing demand for gas-fired generation with the UK storage expected to flip to injections again. The within day contract fell 39.98p to finish the day at 136.03p a therm while the day ahead contract settled down 32.00p at 138.00p per therm.  

 Extending losses for a third day

The fundamentals governing the downward movement in the UK gas market similarly helped pull GB baseload contracts lower yesterday extending losses for a third day. With high wind generation and mild temperatures set to continue for the remainder of the week and next week, as well as ample LNG deliveries forecast, pressure remains on the prompt and curve power prices. The front month of February slipped £16.00/MWh to end the day at £168.50/MWh. Declines also continued in the carbon markets with the spot price slipping another €5.01 to settle at €74.96 a tonne.  

  Another turbulent session

Another turbulent session saw brent crude futures prices further eroded yesterday as negative sentiment surrounding the prospect of a global economic slowdown continued to mount.  A third of the world’s economies, including China, the US and EU are now expected to enter a recession in 2023 according to the International Monetary fund. The potential impact of such a global economic downturn on oil demand has therefore weighed on the market. Brent crude for the front month of March tumbled $4.26 to end the session at $77.84 a barrel while West Texas Intermediate for a February delivery also retreated, ending the day down by $4.09 at $72.84 a barrel.  

Crude oil markets have also seen an uptick

The markets have opened broadly higher this morning with gains made on the contracts which are trading. NBP futures prices for the front month of February most recently traded at 158.55p per therm an increase of 5.47, while the summer 2023 contract is up 3.39p at 172.00p a therm. Crude oil markets have also seen an uptick, with brent for a March delivery currently trading up $1.91 at $79.75 a barrel. The system is operating comfortably with an oversupply of 6.10 MCM against a demand of 359.8 MCM. The within day has yet to trade with the day ahead last trading at 131.00p a therm, down 7.00p.
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