28 LNG cargoes due to berth in the UK

26 January 2023

NBP prices continued their recent slide

NBP prices continued their recent slide, but at a much slower pace. Having lost circa 19.00p per therm a contract across the near curve, yesterday saw more modest losses of almost 5.00p across contracts as far out as Winter-23. Prompt market also saw minimal losses with day ahead closing at 144.05p per therm, a decline of 5p from the previous day. Behind the slide were warming temperatures and the resulting fall in demand. This also was the cause for the decrease in prices on the curve as less gas was being withdrawn from storage, leaving more in stock for the rest of winter and potentially reducing the injection demand come the summer months. Similarly, this also impacted Winter-23 with the risk of insufficient gas in storage diminishing slightly from session to session. Weighing on prices is also the expectation of 28 LNG cargoes due to berth in the UK in total across the month of January.

The above normal temperatures fed into baseload prices yesterday

The above normal temperatures fed into baseload prices yesterday, as most contracts across the board posted losses for a third session in a row. Lower gas prices and high levels of wind generation have also helped to power the bearish market as day ahead baseload lost £10.00 per MWh, and a further £5.75 removed from February as the contract closed at £137.00 per MWh. Even the threat of strikes at French power plants could not arrest the falling prices. Strike action is scheduled for the 31st of January increasing the need for the UK to export to their European neighbours. However, current weather forecast indicates that there will be ample supply in the UK due to strong wind forecast.

 The Oil market held steady on Wednesday

Following yesterday’s losses, the market held steady on Wednesday following the publication of US crude inventories by the Energy Information Administration. Closing at $86.12 a barrel, a small decrease of $0.01, the price reflected the minor concern that although inventories increased, they did so at a much lower rate than had been expected. This slower build in inventories raised slight concerns that there may be a period of tight supply on the horizon. In early trading it looked as if the bears would retain control following peaks earlier in the week, but the weaker inventory data put a stop to that. Oil deliveries from OPEC+ is still expected to remain steady, with the group set to endorse its policy of a reduction in output by 2 million barrels per day at the start of February.

 The bullish tone on Carbon markets continued this morning

There has been modest trading so far this morning with only near-term contracts trading. The UK system opened short this morning as a result of maintenance on Norwegian gas fields. This has fed into prices with the market opening bullish trading as high as 152.24p per therm for February, before falling to 146.30p, an increase of 3.07 p from last nights close. The bullish tone on Carbon markets continued this morning with the December 2023 contract trading at €86.77 per tonne an increase of €2.50 on the previous settlement. Oils markets continue to struggle with improving economic data from China and a build in inventories as Brent is trading $0.74 a barrel higher.
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