Oil prices remain under pressure due to multiple bearish catalysts

24 March 2023

Gas Market

NBP gas prices were elevated during yesterday’s session as the near curve contracts took direction from a colder temperatures forecast. While further dated contracts followed a similar trajectory despite no meaningful change in market fundamentals. The front month contract April, shifted 8.82p higher to settle at 106.54p while contracts for the remaining months of 2023 gained 7.50p on average. It appears the gas market is trying to find a level of resistance as prices continues to fluctuate between positive and negative territory. Gains in the UK gas market were mirrored across European gas hubs, despite bearish fundamentals as storage injections were recorded in multiple countries including Germany. UK prompt prices pushed higher yesterday, with the Day ahead contract gaining 6.00p to settle at 100.05 pence per therm.

 Power Market

GB baseload power future contracts experienced a modest increase in prices yesterday, driven by the positive momentum in the UK gas market. The Winter 23 contract saw the most significant jump, rising by £8.00/MWh to settle at £149.50/MWh. Despite the gain, the contract remained £19.00/MWh below its monthly peak on March 10th. Bullish carbon prices added additional upward pressure to GB power prices yesterday, with the EUA Dec 23 contract gaining €3.50 to close at €93.10 a tonne, marking a 3% increase compared to the previous session.

Oil Market

Oil prices opened in negative territory on Thursday and remained deflated throughout the session as numerous bearish catalysts continue to feed into the market. Thursday’s sentiment took direction from surging US crude oil stocks coupled with the US Federal Reserves decision to increase interest rates despite instability in the banking sector. Instability in the market is set to remain as long as another bank crisis lingers. Brent crude front month ended the session at $75.91 a barrel, down $1.05 while the WTI equivalent slipped 32 cents to $69.64 a barrel. A weak US dollar capped losses as it hit its longest losing streak in over two years yesterday.

Markets this morning

Friday’s gas market has opened relatively muted with limited trading. The front month contract last traded at 104.35p down 2.19 pence per therm while Summer 23 is slideways, last trading at 109.96p per therm. The UK gas system is balanced this morning as ample supply continuous to support the network. Gas storage injections are nominated at 35 MCM while Rough Storage facility has gained an additional 200 MCM storage capacity availability for the coming winter season. Prices are falling in the oil market this morning as bank jitters continue to pressure the commodity. Brent crude last trading $2.54 lower at $73.37 a barrel.  
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