Yesterday’s lack of significant price movement in the UK gas market may have been uneventful, but it does appear to indicate that the market has reached a plateau. Near term contracts settled within a 1.00p range from the previous session, excluding Winter 24 which closed 2.00p lower at 145.86p per therm. The front month May settled at 95.60p down 0.51p on the day. Yesterday’s price is a stark contrast to last August when the contract peaked at 730.40p, a reminder of the gas markets turbulent journey in recent times. European aggregated gas storage levels stood at approximately 57% yesterday, a healthy level ahead of the summer injection period. Unplanned outages in Norway fed into a small uptick in UK prompt prices, however gains were limited as system remained balanced through the day.
The GB baseload power market experienced a stagnant price movement during yesterday’s session. However, the majority of curve contracts have shown a decline over a five-day moving average. The front-month May contract, which has traded in double figures for two consecutive sessions, settled at £98.25/MWh. With limited weekly price movement, the market appears to have stabilised. Significant losses were recorded in the EUA carbon market yesterday, with the spot contract closing at a new month low of $89.25 a tonne. Additionally, the Dec 23 contract shed €2.65 due to strong selling activity.
Price in the global oil markets continued their downward trend during Thursday’s session. The Brent crude front month closing $2.02 lower at $81.10 a barrel, its lowest level in April. Yesterday’s bearish momentum underlines mounting fears of a global recession, as the market appears to have disregarded OPEC+’s unplanned production cuts and the associated risk premium. Weak US economic data continues to influence the market, with unemployment benefit claims increase. However, China’s economic resurgence has helped to mitigate any significant decline in oil prices, with the country’s GDP growing by 4.5% in Q1 2023. The question now is whether this pace of growth can be sustained.
Markets this morning
NBP prompt prices have opened in negative territory, reflective a slight oversupplied gas system this morning. Contract along the curve has opened in the opposite direction, with May the front month last trading 1.90p higher at 97.50 pence per therm. Nonetheless liquidity is thin, which is a common occurrence on Friday’s. Fundamentals remain sideways, with three LNG cargoes expected to arrive into UK ports this weekend. Limited movement has been recorded in oil markets, with the front month last trading at $81.07 a barrel, marginally in line with yesterday’s settlement.