The GB wholesale gas market continued to show weakness on Monday as the near curve fell by a further 1.50p – 2.00p however it was the front winter contract that stole the limelight by shedding over 8.00p. It was the second day in a row that contracts covering 2024, which had resisted the declines witnessed at the front of the curve shed significant premium. The ample gas available has weighed on the near months while contracts from the winter had held firm until Friday. Contracts covering next summer and the winter 24 also shed around 7.50p – 8.00p yesterday with the longer curve mirroring the near months with more modest declines. The NBP prompt also eased on Monday with low demand and a long gas system providing pressure.
The GB baseload futures market responded to the fall in NBP futures and lower carbon prices on Monday. A similar trend played out with near months posting modest losses while the winter and summer contracts shed more premium. The winter-23 contract settled £5.13/MWh lower at £139.75/MWh compared to the front month which settled £0.88/MWh down. Wind generation in the UK was just below 10.0GW on Monday and while forecasts are for lower supplies for Tuesday, generation from wind should be above the average for the last week. Baseload for the day ahead continued to ease yesterday and settled at £82.57/MWh.
Crude oil prices snapped a three-day losing streak on Monday with both benchmarks adding over a dollar a barrel by the close of the day. The markets rose with news of wildfires in Canada which have shut down several supplies of crude oil in Alberta over the last week while fears are running high that the number of shutdowns could escalate. In 2016, wildfires in Canada shut in 1,000,000 barrels of oil equivalent per day production. Fears of a slowdown in the global economy continued to worry the market and this tempered gains on the day. At the close, the July contract for Brent was up $1.06 to $75.23 a barrel.
Markets this morning
NBP futures have opened lower this morning and continued to decline on the latest trades. The front month is 0.69p down at 73.76p while the winter contract has shed 3.46p to last exchange at 122.00p. Trading for the prompt has yet to get underway but contract should open softer as the gas system is forecast to run long again today however demand is a touch higher today at 224mcm. In the crude oil markets, the U.S. Dept of Energy is to purchase 3 million barrels of crude oil in August to restock its strategic reserves and crude oil prices are marginally up.