Gas price movements were the definition of choppy across Tuesday although prices were largely rangebound. In a pattern replicated across all gas contracts, the front month opened below yesterday’s close, before trading down to the day’s low of 64.8 pence per therm. However, by late morning prices had rebounded and where trading in positive territory, gaining momentum across the afternoon with winter-23 trading as high as 126.25 pence per therm. By market close all prices had retraced much of their gains to close essentially flat day on day. Prices movements on the prompt were a little more one-sided where earlier than planned maintenance at a Norwegian gas production facility coupled with low wind generation saw day ahead prices gain 3.00 pence per therm from Monday’s close.
Weak carbon markets fed through to the GB baseload market on Tuesday. For the third session in a row both EUA and UKA futures fell weighing on curve power contracts as both winter-23 and winter-24 lost £3.00 per MWh to close at £136.75/MWh and £133.00/MWh respectively. Despite a lack of wind on the system day ahead prices fell session on session with prices into next week also falling. Forecasts of increased wind and above seasonal norm solar generation is feeding into a weak market for the last week of May. Additionally, the large volumes of LNG arriving into the UK is helping the front month contract to soften.
Oil prices experienced an upward trajectory on Tuesday, benefiting from an optimistic outlook that the U.S. would successfully avoid a debt default. This positive sentiment was further supported by a tighter market perspective and a cautionary statement from the Saudi energy minister directed at speculators, which raised the potential for additional production cuts by OPEC+ to bolster the overall market. The price increase was fuelled by the anticipation of increased US demand ahead of the Memorial Day holiday on May 29, traditionally signalling the commencement of the peak summer driving season. Regarding the U.S. debt ceiling matter, negotiators from the White House and congressional Republicans were scheduled to reconvene later on Tuesday, aiming to overcome the impasse surrounding the need to raise the $31.4 trillion debt limit.
Markets this morning
Front month gas has opened flat again today as cuts to Norwegian flows due to maintenance that is expected to last until August is countered by the strong influx of LNG in UK and North West Europe. Prompt markets remain strong, particularly within day due to a lack of wind generation on the power system. Oil continues its recent upward trend as the OPEC+ threat of further production cuts and a fall in US inventories influence early trading. At $78.11 oil is up by over a dollar from last nights close, a strong movement considering US trading has yet to commence. The recent weakness on the carbon markets continues today with a further fall of over 50 cent per tonne, with Dec-23 trading at €84.92/tonne.