NBP futures settled higher on Thursday
NBP futures settled higher on Thursday, the first time after three sessions of heavy declines. Gas prices have been in decline since the 07-December, near the end of the first cold snap of this winter. Temperatures across northern Europe have generally been above the seasonal norm since then, helping to ease demand while LNG supplies in Europe and the UK have been regularly topped up and this has pressured natural gas wholesale prices. The February contract had declined by 224.65p since then to Wednesday when it closed at its lowest point since early December 2021. The contract climbed 29.65p higher yesterday to settle at 182.73p. Gains to contracts further along the curve and the prompt were more modest yesterday. We may see a period of volatility ahead as the market will continue to be sensitive to forecasts for changes in temperatures or supply niggles as winter progresses.
Baseload futures edged higher
With the gas and power markets declining heavily over the past week there was a pause yesterday and baseload futures edged higher on the back of gains to the NBP futures. The February contract settled £12.00/MWh higher at £180.50/MWh while the March contract posted the greatest gain of the day, £12.90/MWh to close at £171.40/MWh. Wind generation is forecast to remain high going into the weekend and the baseload for the day ahead product settled lower at £107.46/MWh. Yesterday generation from wind was just shy of 20.0GW, almost 50% of UK demand.
Brent settled 85 cents higher
After declining by over $8.00 a barrel on the first two trading days of the year crude oil prices rebounded yesterday morning with reports that a key pipeline feeding the northeast would be offline. The Colonial pipeline is a key pipeline which links New York to the oil fields of Texas and can deliver over 3,000 barrels per day. Yesterday the operator stated the pipeline would be shut down for unscheduled maintenance. The news boosted crude oil prices by over $2.00 a barrel, however, with the pipeline likely to be operational by the weekend the early gains were eroded through the day. The EIA reported a build in U.S. crude stocks for last week, while a stronger dollar will also have dampened the rebound. Brent settled 85 cents higher at $78.69 a barrel.
Gas futures market opened lower this morning
The gas futures market opened lower this morning with February hitting 169.29p, the low for the day but latest trades have seen the market switch direction and February is currently at 188.00p, up 5.27p on yesterday’s close. The March contract is also up by a similar amount while the summer has added 8.79p to last trade at 198.00p. The GB gas system is forecast 11MCM shy against today’s demand of 262MCM, but the prompt has not reacted yet. Crude oil prices have firmed also with Brent 58 cents up at $79.27 a barrel.