UK gas market was relatively calm during yesterday’s session
In contrast to the volatility that we have grown accustomed to, the UK gas market was relatively calm during yesterday’s session. The front month contract March opened at 131.30p per therm but by the end of the day, it had settled 5.57 pence lower at 128.94p. This downward trend was reflected across all contracts, as early signs of the return in flows from Freeport LNG in the US has commenced. Volumes flowed at their highest level since the fire on site in June 2022. Movement in the prompt market followed a similar trajectory with the Day ahead contract losing 8.30p to settle at 130.00 pence per therm. As demand reductions across Europe since the energy crises have not returned, there is potential for further downward pressure if short-term fundamentals remain stable.
GB baseload power contracts edged lower
Yesterday, all GB baseload power contracts edged lower, with losses in the wider energy complex filtering into the soft sentiment. The front month contract March lost £4.00/MWh to settle at £136.00/MWh while the Summer 23 lost the same value to end the day at £140.00/MWh. Spark spread premiums have continued to retreat with Summer 23 settling at £47.98/MWh yesterday. Baseload for day ahead delivery shed £13.73/MWh on Monday to close at 139.00/MWh, back in line with prices at the beginning of the month. Ample gas supply and mild weather has encouraged the recent downward trend.
Global oil markets saw a muted session on Monday
Global oil markets saw a muted session on Monday with limited movement. The Brent Crude front month contract opened at a slightly higher price of $86.51 a barrel and ultimately settled at $86.61 by the end of the day, up 22 cents. Despite the relatively flat market, modest pressured arose from short-term demand concerns as an upcoming inflation report may prompt the Federal Reserve to implement a more aggressive tightening policy. Additional support came from Russia as it plans to cut crude oil production. Overall, Monday’s sentiment reflects a market that is taking a cautious approach in the face of uncertain demand. WTI front month contract followed a similar trajectory, settling at $80.14 a barrel.
Prices in the UK gas market have opened higher
Prices in the UK gas market have opened higher this morning, however liquidity is thin with limited contracts traded. The front month March, last traded at 131.32p up just shy of 2 percent from yesterday’s settlement. The UK gas system has opened 7MCM undersupplied with demand forecast at 297MCM. Nonetheless, Norwegian flows coupled with LNG send out are robust at a combined volume of 283MCM. EUA carbon contracts have opened in positive territory, with the Dec 23 contract last trading at €92.54 a tonne. Brent crude contracts have moved in the opposite direction as the US announced it will release more crude from its reserves.