The decline on UK and European gas markets continued Tuesday with far curve contract in particular continuing their recent collapse. The NBP Winter-23 contract lost 3.74 pence per therm to close at 121.72p/therm, a loss of 20.49p over five days. Behind the recent collapse is the high levels of storage across Nort West Europe (NWE), with the Netherlands on course for to reach record high levels of storage. Exiting the winter period Dutch storage facilities were 59.4% full, and at current injection rates facilities could be 90% full by July four months ahead of schedule. Also helping to keep a lid on near curve gas prices is the continued influx on LNG into NWE. A further two cargos docked in the UK yesterday with 8 more scheduled by the end of the month. As a result, LNG send-out is maintaining its recent strong rate of flow.
The GB near curve baseload contracts all shed value due to the weak NBP gas market. Prices continue to be influenced by the anticipated strong LNG influx. However, despite the weak gas far curve baseload contracts actually increased in value as Carbon markets influenced the GB power market. Prompt contracts were buoyed by the lack of wind on the system despite increased levels of solar power. Carbon markets increased due to a reduced volume of allowances in circulation. Allowances in circulations in 2022 were 1.13 billion EUA’s compared with 1.45 billion in 2021, a trend that will continue in 2023 and could trigger higher prices.
Oil Prices fell on Tuesday on the back of weak economic data emanating from China. Industrial output and retail sales in China for April fell below initial expectations dampening expected demand for the country and the subsequent oil price. This is all despite refineries in China approaching record processing levels, imports topping 11 million barrels per day and an IEA report forecasting global demand increasing to record levels in 2023. Included the IEA report published today contradicts Chinese economic data with the IEA expecting Chinese demand to increase following the lifting of Covid restrictions in the country. Prices fell by 32 cents with actual economic data outweighing forecasted demand increases, with the front month closing the session at $74.91 a barrel.
Markets this morning
NBP gas has opened stronger today following the recent successive sessions of losses brought on by the influx of LNG and relatively healthy levels of storage across Europe. The font month, front quarter and front winter have all traded 2 pence per therm higher than yesterday’s close. Prices may have fallen too quickly over the previous sessions and the market could react with some price corrections over the coming days. The weakness on oil markets continues with initial trades marginally below last night’s close. Carbon is also marginally lower with baseload power following the gas market’s lead and strengthening in early trading this morning.