Gas Market
Yesterday marked the end of the recent downward trend in UK gas prices, with prices edging up slightly during the first trading session of March. However, it was the contracts along the front of the curve that felt the biggest impact of this upward sentiment, with the front month gaining 3.15p and settling at 118.69 pence per therm. This increase was largely driven by nervousness in the market due to the latest weather forecasts, which predict a cold snap in the near future. On the other hand, further dated contracts were unaffected and moved in the opposite direction, with Summer and Winter 2024 contracts shedding 0.40p. NBP prompt contracts, which had been declined over the previous two days, rose again. According to the latest forecasts, Northwest Europe is expected to dip 5 degrees below seasonal norms until March 10th.
Power Market
GB baseload futures moved marginally higher yesterday in line with the gas market. The front month contract took the brunt of the upward pressure, gaining £2.25/MWh to settle at £127.25/MWh. The Summer 24 and Winter 24 also edged 2 percent higher. Despite the modest bounce, gains were capped by the downturn in the EUA carbon market with Dec 23 shedding €2.43 to settle at €97.11 a tonne. Baseload for day ahead delivery settled at £137.63/MWh up £1.69/MWh on the day. Weak wind generation supported the small drop in prices, as UK wind generation remained below seasonal norms.
Oil Market
Global oil benchmarks traded slideway’s during the opening hours of Wednesday’s session as the commodity continues to be pulled between supply and demand fundamentals. On the supply side, US crude inventories have increase for the 10th straight week to reach their highest level since May 2021. While this is being counteracted on the demand side as China’s economy rebounds following strict covid restrictions. The latest data from China showed manufacturing activity in China grew at its fastest pace in decades during Friday, this bullish indicator support the Brent crude front month contract to push higher towards the end of the session and eventually settle $0.86 up at $84.31 a barrel.
Markets this morning
The UK gas market has opened sideways this morning with limited movement across the curve. The front month contract April last traded at 118.75p, up 0.06p from yesterday while seasonal contracts are yet to trade. the UK system is undersupplied by 9MCM, while demand is forecast to reach 319MCM. Wind generation in the UK continues to lag below seasonal norms and is predicted to account for 5GW of the energy mix today. Meanwhile, in the wider energy complex, EUA carbon prices have picked up where they left off yesterday, as the EUA Dec 23 contract last trading at €96.53 a tonne, down €0.39 from the previous session.
02 March 2023
