Oil prices increased yesterday from a 15-month low reached on Monday

22 March 2023

Gas Market

The NBP gas market reversed the majority of the Monday’s losses as the market recovered from the initial shock of the Credit Suisse rescue and prices again moved higher. The majority of Monday’s losses were reversed as prices for the rest of 2023 increased by an average of 8.5 pence per therm, with the near curve contract taking the brunt of the increase. Prices are now only marginally below Friday’s close as the initial fear of demand destruction from a banking led recessions were allayed due to the robust actions of global central banks. In addition to the financial recovery, feeding into the prompt rise was also the prospect of LNG send out today falling by 24% leading to the day ahead contract rising by 6.5p per therm.

Power Market

Wind generation forecasts remain 20% above seasonal norms that is helping to feed into the losses on UK baseload prompt contract, with day ahead falling by 18% being assessed at £83.99/MWh. The strength on the gas markets following the improvement in sentiment on financial markets pushed curve baseload contracts higher, but the gains were more subdued than on the gas market. The carbon market experienced limited fluctuations, with prices ranging between €87.65 per tonne and €91.5 per tonne before settling at €89.73. The market was buoyed by financial markets as were all energy related commodities.

Oil Market

Oil prices increased yesterday, building on a recovery from a 15-month low reached on Monday. This was due to the successful rescue of Credit Suisse by UBS, which eased concerns about a banking crisis that could negatively impact economic growth and reduce fuel demand. Furthermore, the announcement of UBS’s takeover, combined with major central banks’ commitment to enhance market liquidity and support the banking system, led to an overall improvement in sentiment across financial markets. Investors are now eagerly awaiting the outcome of the Federal Reserve’s monetary policy meeting, which commenced on Tuesday. Front month Brent crude was up $1.53 cents, at $75.32 a barrel at the end of trading.

Markets this morning

Gas prices initially opened lower this morning before a brief spike saw the front month contract April trade as high as 104.18p per therm has fallen back to 100.00p. Any contract that has traded followed a similar pattern but are now trading lower than last nights close. American Petroleum Institute figures late last night have indicated that oil inventories rose by approximately 3.3 million barrels that is pressuring Brent lower this morning last trade down 54 cents at $74.78 a barrel. Day ahead gas has traded lower this morning, while within day has yet to trade but is expected to open lower compared to yesterday’s prompt contract.
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