Crude oil has continued to rise

Wind generation output is also expected to fall to 20.00% below seasonal averages

UK NBP prices reversed their recent trend yesterday with gains recorded across the curve. UK temperatures are forecast to remain under seasonal normal averages for the week before approaching normal levels next week, maintaining demand for gas for heating. Wind generation output is also expected to fall to 20.00% below seasonal averages over the same period, increasing demand for gas fired generation. Contracts for the front month of February gained 13.98p to close at 150.74p per therm, with similar gains made for remaining near and summer 2023 contracts. Prompt prices also pushed higher, but movements were more modest. The spot and day ahead gained 4.95p and 5.45p to close at 150.00p and 146.50p per therm respectively as the system remained under supplied throughout the session.

 GB baseload contracts recovered some of the recently recorded losses

GB baseload contracts recovered some of the recently recorded losses, reflecting the movement in the NBP markets yesterday. The cold weather is expected to remain for the rest of the week and wind power forecasts significantly below seasonal averages are likely to maintain pressure on contract prices. Contracts for front month of February gained £13.75/MWh to finish the day at £156.00/MWh while further out the summer 2023 contract added £5.85/MWh to close at £149.50/MWh. Despite the low wind generation forecast, baseload contracts for the day ahead shed £27.48/MWh to close at £139.22/MWh.

 Brent crude reversed direction again yesterday

Brent crude reversed direction again yesterday, extending recent gains on new of positive Chinese demand forecasts. Official data revealed that China’s economic growth, although marginal, exceeded forecasts and raised hopes of a broad demand recovery. Chinese demand is forecast to increase by 0.51m barrels a day in 2023, however overall OECD demand is expected to decline as many of the world’s major economies face the prospect of entering recession over the course of the year. Total oil demand for 2023 is forecast to rise from 99.6m barrels a day in 2022 to 101.8m barrels a day in 2023. Brent crude contracts for a March delivery gained $1.46 to finish the day at $85.92 a barrel.

The UK market has opened with mixed sentiment

The UK market has opened with mixed sentiment this morning. The front month of February has recorded a nominal gain 0.25p to trade most recently at 150.99p per therm. Further out the summer 2023 contract has slipped 2.23p to trade at 153.50p per therm. The system is once again operating with a considerable deficit of 31.80MCM against a demand of 369.40 MCM and the prompt prices have pushed higher. The within day contract has traded up 3.75p at 153.75p per therm while the day ahead has gained 2.50p to trade at 149.00p a therm. Crude oil has continued to rise with the March contract up $1.24 at $87.16 a barrel.

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