The global oil markets continued their recent upward trend on Wednesday

13 April 2023

Gas Market

Yesterday’s trading session in the UK gas market featured mixed movement. With near curve contracts experiencing a slight decrease, seasonal contracts further out found support from the anticipated summer injection period as Europe concentrates on refilling its storage levels. The front month contract May lost 1.83p to close at 100.80p. Despite the marginal loss, confidence in the contract remains high due to strong near-term fundamentals, leading to a 27.47p loss over the last five days of trading. Meanwhile, the bellwether contract Summer 24 posted modest gains, settling 2.38p higher at 141.51 pence per therm, as storage injection is expected to become a bigger issue next year.  Price movement within the prompt market was flat, with the Day ahead contract closing at 100.10 pence.

Power Market

GB baseload near curve contracts experienced a slight dip during yesterday’s session, while the far curve maintained its risk premium. Downward pressure in the UK gas market filtered into the front month contract which shed £1.65/MWh to settle at £105.35/MWh. The Summer 24 contract edged £1.25/MWh higher to close at £128.25/MWh. Despite the gain, the contract is down £8.25/MWh over five days. EUA carbon contracts reversed the previous session gains during yesterday’s session. The Dec 23 contract lost €1.20 to close at €96.27 a tonne. Traders are expected to play close attention to Eurozone economic data which is expected to be realised before the end of the week.

 Oil Market

The global oil markets continued their recent upward trend on Wednesday, marking the fourth consecutive session of gains. Despite experiencing a lack of direction in the early hours of trading, the market experienced a surge in the afternoon following the release of the latest US economic data. The data indicated that inflation in the world’s largest economy had risen modestly in March, providing optimism that the Federal Reserve is approaching the end of its cycle of rate hikes. By the end of the session, the Brent crude front month contract had climbed to $87.33 per barrel, a gain of $1.72 on the day, while the WTI equivalent finished 2% higher. This positive momentum was further bolstered by the weakening US dollar.

Markets this morning

Prices have opened lower in the UK gas market this morning, albeit marginal. The front month contract May last traded at 100.13p while the front quarter Q3 23 has slipped 2.74p to last trade at 107.50 pence per therm. The UK system has opened balanced this morning, with the robust Norwegian flows and ample LNG meeting demand. While UK storage injections are forecast at 8MCM compared to withdrawal yesterday.  In the wider fuel mix EUA carbon contracts has picked up where they left off and continue to trade lower, the Dec 23 contract last traded at €93.45 a tonne.
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