The NBP curve opened softer yesterday

21 March 2023

Gas Market

The NBP curve opened softer yesterday and losses were extended through the session with near months settling down by 9.75p on average.  The summer contract shed 9.41p to close at 99.11p, the lowest settlement for the contract since 25-Jan-22. Prompt products shed a significant amount of premium too with the spot down 8.60p and the day ahead closed 7.45p lower. The bearish sentiment was driven by forecasts for mild weather, strong wind generation while ample storage stocks which should comfortably see out a late blast of winter if that were to come. Adding to that, LNG supplies are being topped up this week as strikes at French terminals are redirecting cargoes to UK ports.  The level of gas in storage means reinjection demand will be limited during the summer months.    

Power Market

Wind generation is forecast to be around 20.0% above the seasonal norms over the next two weeks.  This combined with declining prompt contracts on the NBP to weigh on the baseload power prompt.  The day ahead contract fell by £15.40/MWh to settled at £102.95/MWh.  Carbon EUAs continued to ease on Monday but declines were marginal with the spot 32 cent down.GB baseload futures tracked the NBP gas curve lower yesterday and the front month, April, eased by £5.60/MWh to settle at £103.15/MWh.  The summer contract closed at £110.00/MWh, down £6.90/MWh.    

Oil Market

News of the deal between Switzerland’s largest bank UBS and Credit Suisse, it’s second largest bank seems to have calmed the markets yesterday. Crude oil prices tanked on opening, with the May contract for Brent falling to $70.12 a barrel in early trading and it looked like failing further. However, as details of the rescue deal emerged along with further pledges and assurances from the European Central Bank and the U.S Fed, the crude oil markets shifted direction as equities rebounded. Volatility in the market is likely to remain with concerns the U.S Fed is expected to raise interest rates again this week. At the close, Brent for May delivery settled at $73.79 a barrel, up 82 cents.    

Markets this morning.

The UK gas system has opened in positive territory, although gains are marginal. The front month contract has gained 2.99p and last traded at 97.27 pence per them. The UK gas system has opened 24MCM undersupplied, which has supported a small bounce in the Spot contract, up 11.55p at 104.00p this morning. A drop in LNG flows is feeding into the upward sentiment coupled with the Unite union announcing industrial action in the coming days on offshore platforms. Oil prices have opened higher during initial trading this morning, with the front month last trading at $74.65 a barrel.    
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