A stronger dollar weighed on crude oil prices

18 April 2023

Gas Market

The GB gas markets remained subdued on Monday with early gains of around 2.00p-3.00p being reversed later in the session as futures settled mixed.  The front month, May settled just 0.30p higher at 98.76p while the winter contract eased by 0.79p to 146.71p.  Forecasts for wind generation to pick up weighed on the day ahead product which declined by a half a penny yesterday however, the balance of month contract added 1.70p to close 99.75p as the prompt also settled mixed. Latest reports are forecasting 12 LNG cargoes to land at UK ports by early May and in the meantime, if the increased wind generation continues to dent gas demand this could allow for some reinjection to storage reserves.

 Power Market

The GB baseload futures market matched the movement on the NBP curve and also settled mixed on Monday with May gaining £0.75/MWh while the winter contract eased by £0.75/MWh.  Forecasts for wind generation to rise above the seasonal norm weighed on the spot but the day ahead product failed to retrace all the early gains and settled £1.37/MWh higher. Carbon prices eased on Monday with EUAs down by around 1.0% on average as the spot closed at €90.45 per tonne. The Dec-23 contract declined by €1.19 to €92.91 per tonne.  UKAs shed £1.40 per tonne with Dec-23 contract settling at £69.25 per tonne.

  Oil Market

A stronger dollar weighed on crude oil prices at the start of the week as Brent settled $1.55 a barrel down.  While the dollar has made gains against a basket of currencies, there is also expectation that the U.S. Fed will increase interest rates by a quarter of a percentage point in May and that has cooled the market. Some bullish news could come from China, with GDP results for the first quarter expected on Tuesday and this could support prices with the International Energy Agency recently reporting that most of the growth in crude oil demand for 2023 would be attributed to the world’s second largest crude oil importer. Brent for June delivery settled at $84.76 a barrel and the May contract for the U.S. benchmark, WTI, settled at $80.83 a barrel.

 Markets this morning

The gas market has begun in a similar fashion to Monday’s opening with near months opening stronger but some of the premium has been eroded on the latest trades.  The May contract reached a high of 101.00p earlier but is back to 99.10p on the last trade.  The winter contract is down 2.00p intra-day with the last exchange going through at 146.50p, just 0.21p below last night’s close.  On the prompt the day ahead is up 0.75p to 98.50p and the spot is unchanged. With wind generation increasing, GB gas demand is down to 249MCM for today and the supplies are forecast 12MCM long.  
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