A late fall in crude oil prices dented the week’s gain for Brent

22 May 2023

Gas Market

The GB gas markets opened a touch higher on Friday with scheduled Norwegian maintenance stepping up and tightening supply margins on the day.  Gas demand was down at 218mcm on Friday and supplies didn’t balance until later in the session and this provided support to the spot and day ahead contracts on the day.  Forecasts for increased solar photovoltaic generation should displace some gas generators from the power stack in the week ahead and prompt contracts for the week ahead and balance of month eased on Friday.  The June contract ended the session marginally up but was 7.87p down for the week while the winter contract settled at 121.75p adding 1.80p  

Power Market

Baseload futures settled mixed on Friday with lower carbon prices countering some of the support from the NBP futures.  The June contract settled £0.75/MWh down on the day or £3.88/MWh over the week to close at £81.50/MWh.  The winter contract gained £0.85/MWh to settled at £141.50/MWh.  While the spot price for EUAs settled flat, the Dec-23 contract declined by 33 cent per tonne. Levels of generation from solar photovoltaic are to increase in the week ahead and may offset the decrease in wind generation.  As a result, baseload for the day ahead declined by almost £5.00/MWh to £75.50/MWh on Friday.  Wind generation is forecast at around 9.0GW for the start of the week.  

 Oil Market

A late fall in crude oil prices dented the week’s gain for Brent to just $1.41 a barrel.  The global benchmark had traded higher through the last session of the week buoyed by the probability of the U.S. defaulting on its debt.  Talks to increase the debt ceiling broke down earlier on Friday and it looked like the U.S. debt limit would have to remain at its current level of $31.3 trillion.  Concerns of rising inflation and low demand continue weigh on the market and a glimpse of hope that U.S. debt negotiations could continue over the weekend provided pressure to prices late on.  At the close, The July contract for Brent settled 28 cents down at $75.58 a barrel, while the U.S. benchmark, West Texas Intermediate for June eased by 31 cents to $71.55 a barrel.  

Markets this morning

Gas demand has fallen to 205mcm today and supplies are forecast 11mcm long by the National Grid. Norwegian flows are still nominated around 45mcm, but LNG flows remain robust with six cargoes expected to land at GB ports over the week ahead.  The prompt has opened lower in response to the comfortable system with the spot down 4.05p while the day ahead is 2.40p lower.  The NBP curve has opened softer too with the June contract 3.11p down from Friday’s close at 65.25p.  Crude oil prices have been trading sideways with the last trade for Brent just 7 cents a barrel up.  
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