UK gas prices made modest losses during yesterday’s session, with the front of the curve taking the biggest hit. Healthy near-term fundamentals is the main driving force behind the erosion of risk premium for near delivery contracts, while an element of uncertainly further out is reflected in the limited price movement. The front month contract May lost 5.81p to settle at 96.11 pence per therm, a price not witnessed since late December 2021, while the bellwether contract Winter 23 settled at a monthly low at 144.06p. UK prompt prices also retreated during yesterday’s session, with the Within day and Day ahead contract both closing at 95.05p. The UK day ahead contract maintained a 13.87p discount compared to the Dutch TTF equivalent.
GB baseload prices shed their recent gains during yesterday’s session, with losses recorded across the curve. Weakness in the NBP gas market filtered into power prices, with the front month shifting £5.00/MWh lower to settle at £98.75. Q4 23 posted the largest loss, down £7.20/MWh to settle at £147.65/MWh, while Winter 23 settled at a 12 day low at £153.50/MWh. The EUA Dec 23 saw an early peak of €96.47 per tonne before closing at €94.40 yesterday, a decrease of €1.10. Eurostat’s latest figures released yesterday indicate that European gas demand fell by 18% between August 22 and March 23, exceeding the targeted reduction of 15%.
Global oil markets turned bearish yesterday, as fears of weaker demand filtered in the market. The Brent crude front-month contract retreated $1.65 to settle at a 10-day low of $83.12 per barrel, effectively erasing all gains recorded since OPEC’s surprise announcement earlier this month. Additional pressure came from a strengthening US dollar, which has heightened concerns that the upcoming Federal Reserve interest rate hikes could dampen energy demand in the world’s top consumer. However, losses were somewhat mitigated by signs of a potential economic revival in China, as the government unveiled plans to bolster growth. The International Energy Agency has projected that China may account for over half of the global oil demand growth this year.
Markets this morning
The sentiment from yesterday is persisting, with gas prices so far remaining near to last night’s close. Having initially opened lower May-23 is trading just above last night’s assessment at 96.74 pence per therm. Only two other contracts have traded so far, Jun-23 and Jul-23, with both trading at a similar level to last night’s settlement. Prompt prices have yet to trade but bid prices indicate a further decline for the within day and day ahead contracts. The decline on brent crude is also continuing this morning with a strengthening dollar likely the main driver of the downward movement. Likewise, Carbon is retaining its downward momentum this morning with Dec-23 down 86 cents at €93.53 per tonne.