UK NBP gas prices fell Monday due to revised temperature forecasts
UK NBP gas prices fell Monday due to revised temperature forecasts for the rest of the week. Temperatures, although still below seasonal norms, are expected to be half a degree higher than was thought last week. The paper talk of a possible beast from the east event has waned somewhat also helping to push gas prices lower. Coupled with this is an updated wind forecast that is expected to result in 50% more electricity generated from wind this week than was anticipated last week helping to add further downward pressure to prices. The weakness on the oil markets fed into the curve contract on gas as losses were posted across the board. Despite these losses European gas contracts are still priced above their Asian counterparts ensuring LNG cargos continue to berth in the region. The UK is expected to receive 10 laden LNG vessels by the 18 March, with Belgium expected to receive 6 cargos by 7 March.
GB baseload tracked gas prices lower on Monday
GB baseload tracked gas prices lower on Monday with the greatest losses seen on the nearer term contracts. On expiry March lost £8.50/MWh, with April losing £7.25 to close the session at £127.75/MWh. The expected increase in wind generation will help to keep prices lower, while the expected return of Nuclear this week may help to depress prices further and limit any gains on the NBP gas market. European carbon retraced most of the losses from last Thursday and Friday, as the Dec-23 contract once again breached the €100/tonne mark yesterday. Traders continue to highlight that the market is disconnected from market fundamentals and is being driven by speculative trading.
A firm dollar makes oil prices in the US currency more expensive.
Global crude markets continued to take direction from the sentiment in the broader financial markets. A strong dollar, hovering near a seven-week peak on Monday, buoyed by a slew of strong economic date reinforced the view that the Federal Reserve in the US will have to further raise interest rates. A firm dollar makes oil prices in the US currency more expensive for holders of other currencies, hence the decline of 63 cents yesterday as Brent closed at $82.3 a barrel. The decline was tempered by the halting of piped oil supplies to Poland over the weekend, which continued into Monday. Russian pipeline operator said the cessation of flows was due to a lack of completed paperwork, however the stop in flows occurred the day following Poland’s confirmation it had delivered its first Leopard tanks to Ukraine.
Oil has reversed most of yesterday’s loses
Trading this morning is muted with only April, May and Q2-23 trading so far this morning. All three contracts are up marginally on yesterday’s close in thin trading, but at this early-stage direction may be lacking. Prompt contract have yet to trade either, with a wide bid-offer spread making it difficult to pinpoint where markets may go today. Within day is bid at 97p per therm, while day ahead is offered at 124p per therm. Oil has reversed most of yesterday’s loses up 61 cent per barrel with markets reacting to hopes of a solid economic rebound in China will drive up fuels demand. Somewhat surprisingly Carbon has maintained yesterday’s gains with the Dec-23 contract trading at yesterday’s close.
28 February 2023
