A stronger than expected flow of gas from Norway coupled with low demand weighed on the prompt and near curve yesterday. Scheduled maintenance works at the Karsto field was suspended yesterday which increased gas flows to the UK on the day. Prompt prices were falling earlier with demand subdued due to the mild weather and plentiful wind generation. At the end of the day the within day product was just over 2.00p lower while the day ahead contract declined by 3.20p. Similar losses were recorded at the front of the curve with June easing by 1.76p to close at 83.60p. Further out the winter contract settled at 143.83p, down 1.66p.
GB baseload futures continued to ease on Wednesday pressured by falling NBP futures and lower carbon prices. The new front month for the power curve, June, settled £1.75/MWh down at £89.50/MWh. Further out, the winter contract closed at £149.50/MWh, declining by £2.38/MWh on the day. Forecasts for wind generation to rise above 14.5GW for Thursday and remain strong for the remainder of the week weighed on the day ahead product yesterday. The contract shed £8.00/MWh to close at £83.97/MWh.
Crude oil prices recorded another steep decline on Wednesday following the latest interest rate increase by the U.S. Federal Reserve. The Fed added another 0.25% to the interest rate and this is expected to be followed in Europe later today with analysts divided on whether the ECB will increase rates by a half of one percent or a quarter of a percentage point. The U.S. Fed hinted that further interest rate increases would be stalled to give time to find a resolution to the U.S. debt obligations. The July contract for Brent settled $2.99 down at $72.32 a barrel, while the U.S. benchmark, West Texas Intermediate, for June settled at $68.60, shedding $3.06 a barrel.
Markets this morning
The GB gas system is forecast long again today with a surplus of 12mcm over today’s demand of 212mcm. High output from wind generation continues to displace gas fired generators from the power stack while warmer temperatures have dented domestic demand. Prompt prices have opened softer as a result with the spot down 3.55p while the day ahead product is 2.05p lower. The front month and season contracts for the NBP are marginally down in early exchanges this morning while in the crude oil markets Brent has recovered some of the heavy losses from the last two sessions and is 80 cent up at $73.13 a barrel.