UK gas prices fell back on Wednesday following a rally on the previous day as the market sought direction from market fundamentals. April the front month contract peaked at 104.18p before falling back to settle at 97.72 pence per therm. For additional context the April contract is down 92.63p from its annual high of 190.35p on January 9th reminding us of how volatile the energy market can be. The downward trajectory front the front of the curve was supported by LNG cargoes originally destined for France being diverted to the UK amid industrial action at French ports . With no strong fundamental driver in the prompt market, prices remained relatively flat yesterday, with the Within day and Day ahead settling at 95.25p and 94.05p respectively.
GB baseload future contracts eased on Wednesday, however losses were marginal. The front month contract April, ended the session at £106.05/MWh down £0.85/MWh on the day while Summer 23 lost £2.00/MWh to settle at £113.00/MWh. Losses in the NBP gas market coupled with a downward sentiment in carbon prices supported influenced the power market yesterday. EUA carbon prices extended their losses yesterday, with the Dec 23 contract shifting €0.84 lower to close at €89.60 a tonne. The turmoil in the banking sector has weighed on EUA prices this week, as investors are forced to reduce their EUA positions to cover losses.
On Wednesday, oil prices rose by 2% to reach a one-week high, despite a surprising increase in U.S. crude inventories that hit a 22-month high. The U.S. dollar also declined to its lowest level since February 3 against a basket of other currencies, which supported oil demand by making crude cheaper for buyers using other currencies. This increase was further aided by the Federal Reserve’s decision to increase short-term interest rates by 25 basis points, signalling the stabilization of the bank system. However, the oil market is expected to remain volatile as prices for the commodity serve as a global barometer for economic health, and it remains uncertain what lies ahead. Brent crude’s front-month contract settled at $76.96 a barrel, up $1.64 on the day.
Markets this morning.
Movement in the UK gas market is limited this morning with prices marginally in line with yesterday. The front month contract last traded at 100.50p while the front season is yet to trade. In the prompt market, movement is also muted with the Day ahead contract last trading at 93.58 pence per therm. The UK gas system is balanced this morning, with storage injections forecast at 32MCM as a result. Shutdown at French LNG terminals Fos and Montoir have been extended until 24 March which is expected to cause the redirection of cargoes. Brent crude prices have failed to hang onto their upward momentum this morning, with the front month last trading at $76.07 a barrel, down $0.89.