Global oil prices stabilized yesterday

18 May 2023

Gas Market

NBP near curve dipped lower yesterday for the fourth consecutive session, while winter risk lifted contracts further along the curve. An abundance of LNG continues to pressure June, the front month contract which settled at 72.95p yesterday, its lowest level since late November. To reflect on the gas markets journey since the energy crisis, the June contract reached a staggering 725.04p in late August, a reminder of what price levels can be reached. The front seasons fell short of recovering the previous sessions loss, but did record gains of 4.47p on average. Despite the start of Norwegian gas infrastructure maintenance period, Europe is maintaining a robust level of storage injection. The Day ahead contract lost 2.90p yesterday to settle at 71.50p, a price not observed since late October of last year.  

Power Market

Prices in the GB baseload power market pushed higher during yesterday’s session, however contracts remained in negative territory over a five day average. Gains were limited along the front of the curve, with the front month June, edging £0.75/MWh higher at £84.50/MWh. While the uptick was more prominent further out. The bellwether contract Winter 23 settled at £142.00/MWh up £4.00/MWh on the day. Baseload for day ahead delivery settled at £83.10/MWh yesterday, down £4.20/MWh. Robust wind generation supported the losses, as wind generation is forecast 20% above seasonal norm. Baseload Day ahead has averaged at £86.94/MWh so far this month.  

 Oil Market

Global oil prices experienced a decline in the early hours of Wednesday, opening at $74.67 per barrel. However, as the day progressed, prices stabilized and eventually settled at $76.96 per barrel,  an increase of $2.05. The positive shift can be attributed to the release of oil demand forecasts by the International Energy Agency, indicating a projected increase in demand during the second half of the year. Despite yesterday’s gains, the prevailing macroeconomic climate has been unfavourable for the oil market. Lingering uncertainty surrounds China’s recovery, and ongoing negotiations regarding the US debt ceiling highlight the instability in the global economic powerhouse. In May, the average price for the front month currently stands at $75.21, reflecting a decline of $8.05 compared to the average of the previous month.  

Markets this morning

Price movement in the UK gas market is limited this morning, with the front month and Day Ahead product both trading at 71.00 pence per therm, while Winter 23 last traded at 126.25p broadly in line with yesterday close. The UK gas system has opened 16MCM oversupplied this morning, while IUK exports have been nominated at 46MCM, showing a slight decrease from yesterday due to the narrowing discount between the NBP Day Ahead and the TTF equivalent, which was at 9.88p yesterday.  In the wider fuel mix, EUA carbon prices have opened higher, the Dec 23 contract last trading at €88.75 a tonne. Brent crude is moving in the opposite direction, down $0.32 this morning at $76.64 a barrel.  
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