UK natural gas forward contracts saw declines during Friday’s session, with weak demand and few bullish factors evident to drive prices back into an upward trend. Contracts for delivery for the remaining months of the year lost 1.79p on average while the bellwether contract Winter 23 settled at 146.07p, down 1.57 pence per therm on the day. Although prices retreated on Friday, the five-day average movement indicates a split within the market. Near curve contracts are maintaining the unwinding of risk premium, while a level of uncertainty is dominating further dated contracts which remain in positive territory. NBP prompt prices also pushed marginally lower on Friday, with the Within Day and Day ahead both posting losses of 0.45p per therm. Ample supply and significant storage levels for this time of year continues to influence the current sentiment.
Risk premium eroded from the front of the GB baseload curve on Friday, with the front month May settling at £91.50/MWh, this marked a decrease of £3.15/MWh for its last session as the front month contract. While the UK gas market experienced losses that supported the downward pressure, losses in the carbon market prevented a further drop. The seasonal contracts for 2024 concluded the session in positive territory as there is still a level of uncertainty in the market. GB baseload for day ahead delivery closed at £100.17/MWh, up £6.87 on the day, due to wind generation falling 20% below seasonal norm.
Global oil markets experienced a second consecutive session of upward pressure on Friday. Despite this, the commodity recorded its second consecutive weekly loss, indicating that concerns of an economic recession are still influencing the market. Additionally, market participants are closely monitoring the pace of demand recovery in China, as the latest figures indicate that it is falling behind expectations. China’s significant economic size makes it a major driving force behind oil demand. Starting from the beginning of May, OPEC+ will implement an output cut of 1.16 million barrels per day. However, in an attempt to push prices back above the $80 a barrel mark, OPEC+ may decide to introduce further production cuts. On Friday, Brent crude front month settled at $79.31 a barrel, reflecting a decline of $0.94.
Markets this morning
Limited price movement has been recorded in the UK gas market this morning as liquidity is thin. The June contract which has gained front month status last traded at 86.30p per therm, down 2.23p while the front season, Winter 23 is yet to trade. Contracts in the prompt market are yet to trade also, however the UK gas system is well supplied so any significant change in prices are not expected. The UK continues to export gas to mainland Europe with the IUK and BBL interconnectors forecast to export a combined volumes of 61MCM today, while storage injections are also expected. Brent crude front month last traded at $79.19 a barrel, down 12 cents from Friday.