Prices are back below where they were at the time of the invasion.

The NBP was fairly muted yesterday

Friday brings the first anniversary of the start of the Russian Ukraine war and energy prices have gone through a hell of a rollercoaster ride over the last year.  Wholesale gas prices had already started to climb well before President Putin ordered the invasion and during last summer the markets witnessed extreme volatility culminating on 26-Aug-22 with peaks of 827.08p for the winter-22 and 726.26p for summer-23 contracts for the NBP.  The mild winter has helped Europe and the UK with gas supplies not really tested so far. Prices are back below where they were at the time of the invasion and Europe has taken steps to shore up alternative gas and oil supplies for the coming winter and beyond, although the recovery in China could create more competition for LNG supplies later this year. The NBP was fairly muted yesterday as futures settled mixed while the prompt recorded minor gains.  

 Carbon prices recovered the losses recorded on Friday

Latest forecasts show temperatures are expected to fall closer to the norm for the time of year for the remainder of February and the prompt settled higher.  Baseload for the day ahead gained almost £15.00/MWh yesterday as wind generation is to fall below the average levels seen last week to around 7.0GW.  Baseload futures settled mixed yesterday with contracts remaining within +/- £3.35/MWh of Fridays close. Carbon prices recovered the losses recorded on Friday and settled close to the levels at close of play on Thursday.  The Dec-23 EUA contract settled at €98.30 per tonne, gaining €1.90 yesterday.  The Dec-23 contract for UKA gained £1.17 to close at £84.17 per tonne.  

 Trading volumes west of the Atlantic were muted

It was a U.S. holiday yesterday which meant trading volumes west of the Atlantic were muted.  Brent for April delivery added $1.07 to close at $84.07 a barrel, while the U.S. benchmark, West Texas Intermediate for March, settled at $77.19, up 85 cents a barrel.  The markets were buoyed by optimism around a recovery in Chinese demand.  Estimates show China’s imports of crude oil are to rise between 500,000 and 1million barrels per day for 2023.  Earlier in the month, The International Energy Agency forecast for demand in China to rise by 2m barrels per day with China needing to import 1.1m barrels per day.  

 Contracts continue to ease this morning

Trading on the NBP futures market has continued where it left off last night and contracts continue to ease this morning.  The front month last traded at 120.91p, which is below Friday’s close.  The April contract is down 3.89p, a penny more than the March contract at 119.41p while the summer contract has declined by 3.96p.  The prompt board is showing no trades thus far, but indications are the spot and day ahead will open lower.  The GB gas system is well supplied this morning with demand forecast at 284MCM.  The April contract for brent is down and last exchanged at $83.71 a barrel.  

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