Front month experienced the most significant downward pressure
NBP gas prices retreated slightly yesterday, with the market remaining cautious. The front month experienced the most significant downward pressure, shedding the previous session’s gains and settling at 129.51p, in line with pre-war levels. The front seasonal contract Summer 23 lost 5.50p and ended the day at 132.60p, down 23.91p per therm since the beginning of February. An improved weather forecast weighed on contracts in the UK prompt market, as the expected cold snap is no longer anticipated. The Within day and Day ahead contracts settled at 128.05p and 124.05p, respectively. The Dutch TTF Day ahead followed a similar trajectory, declining by 6% compared to the 7% loss in the UK contract.
The Dec 23 EUA carbon contract reached a new six-month high
Yesterday’s downward trend in the UK gas market filter into GB baseload future prices, with the front month taking the brunt of the pressure. Losses were evident across the curve despite an uptick in carbon prices. The Dec 23 EUA carbon contract reached a new six-month high, settling at €97.90 a tonne. The RERowerEU plan, which promises additional supplies, has not been effective in curbing prices. The bellwether contract Summer 23 ended the day at £139.50/MWh, down £5.00/MWh while baseload for the day ahead settled at a new monthly low of £120.27/MWh yesterday
Global oil markets experienced limited activity
On Thursday, the global oil markets experienced limited activity with prices remaining stagnant. Despite opening at $85.27, the Brent crude front month did not deviate from this price range for the entirety of the day, reflecting a lack of momentum in the market. The WTI market followed a similar trajectory, with the front month settling at $78.49 a barrel, down 10 cents. During early trading hours, a strong US dollar influenced the market. It is a common observation among market watchers that the dollar’s strength can have a negative impact on oil prices. Since crude transactions are typically conducted in dollars, a stronger dollar can suppress the rise in oil prices.
NBP prompt contracts are also continuing to decline
UK gas prices opened in negative territory this morning, with the front month contract taking the biggest hit at 122.69p, down 6.82p from yesterday. The front quarter is following a similar trend, down 6.31p at 125.00 pence per therm. Healthy near therm fundamentals are encouraging the erosion of risk premium in the gas market. Meanwhile, NBP prompt contracts are also continuing to decline, as the Day ahead contract last traded at 119.25 pence per therm down 4.80p. Ample supply is supporting the market as the UK gas system opened 10MCM over supplied with demand forecast at 243MCM.
17 February 2023
