Ample storage levels and continued healthy LNG deliveries prevented a rally in gas prices
Despite temperatures declining to below normal levels, raising the demand for gas for heating, Monday saw another session with NBP prices retreating significantly. Ample storage levels and continued healthy LNG deliveries prevented a rally in gas prices in the face of the cold snap expected to last for the remainder of the week. Wind generation forecasts have also been revised downward, potentially increasing the demand for gas fired generation. Contracts for a February delivery shed 25.78p to finish the day at 136.76p per therm while the summer 2023 contract fell 23.78p to 144.67p per therm. On the prompt, prices were also down with the spot declining by 13.00p to settle at 145.05p per therm while the day ahead fell 26.00p to close at 141.05p per therm.
Wind generation is forecast to trail 20.00% below normal levels
Declines in the NBP curve and falling carbon prices continued to pressure the GB baseload curve on Monday. The front month of February retreated by £20.75/MWh to close at £142.25/MWh while the summer 2023 contract slipped £15.85/MWh to finish the day at £143.65/MWh. The current cold snap is expected to remain for the rest of the week during which wind generation is forecast to trail 20.00% below normal levels. The low wind output helped support day ahead prices on Monday as they rose £48.74/MWh to close at £116.70/MWh.
Crude oil prices eased slightly yesterday
After recording gains for 5 consecutive days, crude oil prices eased slightly yesterday. Prices held near recent highs however as the easing of Covid restrictions in China, the world’s largest oil importer, raised hopes of a demand recovery. Although total Chinese crude imports for 2022 were below those recorded for 2021, figures for December showed an uptick of 4.00% on December 2021. A resurgence in travel and thus demand for transportation fuels, is also widely expected ahead of the Lunar New Year holiday this weekend. Contracts for the front month of March ended the day at $84.46 a barrel, a decline of 82 cent.
UK gas futures markets have opened lower
UK gas futures markets have opened lower this morning with moderate declines on the contracts which have so far traded. The front month of February has traded at 134.38p a therm, down 2.38p while the summer 2023 contract was most recently down 7.67p, trading at 137.00p per therm. The system has opened with a significant deficit of 30.60MCM against a demand of 367.80 MCM, however prompt prices have also traded down. The within day contract most recently traded at 141.50p per therm while the day ahead traded at 137.00p a therm, declines of 3.55p and 4.05p respectively. Brent crude has seen an upward push, with the March contract last trading 60 cent up at $85.05 a barrel.