UK gas prices initially opened higher on Wednesday, but then reversed to turn negative as the fundamental picture was evaluated. Demand weakness persists across Europe, while risk premium resulting from French strikes and weather concerns has eased and as a result the market appears to be correcting itself. The front month contract took the biggest hit yesterday, losing 8.22p to settle at 106.64p per therm, the TTF equivalent contract remained at a premium to settle at 114.61 pence per therm. Further along the curve contracts for delivery in 2024 showed modest losses, with Winter 24 and Summer 24 shedding 8.15p on average. NBP prompt contracts also ended yesterday’s session with a bearish tone, the Day ahead contract settled at 104.75p down 7.30 pence per therm. Warmer weather conditions and an unaffected supply side supported the downward pressure.
GB baseload power futures eased on Wednesday, as selling activity intensifies ahead of the Easter holidays. The near curve took the brunt of the downward sentiment with the front month May shedding £5.25/MWh to settle at £109.75/MWh. The contract has lost £2.50/MWh over the last five days of trading. Losses in the UK power market were mirrored in the NBP gas hub. Baseload for a day ahead delivery settled £10.18/MWh lower at £114.38/MWh yesterday. Despite wind generation being forecasted to be 20% below the seasonal average, the market followed the negative sentiment in the UK gas market.
On Wednesday morning, the global oil market showed a positive opening, buoyed by the OPEC+ curtailment announcement and the decreasing US stock. However, as the day progressed upward momentum began to retreat, and prices eventually settled sideways at $84.99 a barrel. An agreement between the central Iraqi government and the Kurdish Regional Government has been reached, leading to the resumption of oil shipments through the Turkish port of Ceyhan. Despite this downward pressure arose from weak US economic data which once again intensified worries of a global recession and demand reduction. The US economy has a significant impact on crude oil prices as it is the largest consumer of the commodity globally and also the world’s largest economy.
Markets this morning
The UK gas market is experiencing low liquidity this morning ahead of the long weekend, making it challenging to predict the price direction for today. However, the contracts that have traded, including the front month, have opened with a slight downward trend. Significant bid offer spread are also present within NBP seasonal contracts. The muted sentiment is mirrored in the prompt market as Within day and Day ahead contracts are yet to trade. Robust LNG send out continues to meet demand, with the UK gas system balanced this morning. Brent crude prices have opened lower this morning, as the front month last traded at $84.51 a barrel.