Energy prices across Europe weakened on Thursday

26 May 2023

Gas Market

There was a significant downward shift in NBP contracts for the winter and next summer yesterday as energy prices across Europe weakened.  European storage gas supplies are at over 65% of capacity and have reached this level sooner than anticipated.  Storage gas reinjection has been aided by low demand and ample LNG supplies which until recently just weighed on the near curve. The front winter contract for the NBP fell by 9.34p yesterday settling at 115.42p, its lowest price in 16-months. Closer in, the June contract declined by 5.79p to settled at 58.58p while prompt prices for the NBP looked past the early short gas system yesterday and fell by an average of 7.25p.  

Power Market

Energy prices across Europe tumbled on Thursday and the GB baseload curve was no exception.  As with the NBP curve, losses for the two front seasonal contracts were almost twice that of the front months as June settled £3.85/MWh down on the day while the winter dropped by £8.05/MWh.  It’s evidence of a build in gas storage supplies earlier than expected across Europe. Baseload prompt contracts continued to ease on Thursday and the day ahead product shed over 5.0% or £4.03/MWh despite forecasts for wind generation to come in under 3.0GW.  Solar photovoltaic generation continues to remain strong however, with forecasts around 4.5GW for Friday.  

Oil Market

Crude oil prices reversed most of the gains recorded over the previous two sessions on Thursday after the Russian Deputy PM said further production cuts by OPEC+ were unlikely.  Earlier in the week prices received a boost when the Saudi Energy Minister warned crude oil prices would rebound and the market took this as a hint that OPEC were considering applying further restrictions to the group’s production. Yesterday’s comments from Mr Novak downplayed the idea of more cuts and created some confusion around the group’s intentions when they meet next week.  Prices ticked up late in the session on renewed optimism that the U.S. Congress was close to a deal to raise the debt ceiling.  At the close, Brent for July delivery fell by $2.10 to close at $76.26 a barrel.  

Markets this morning

With the UK heading into a long weekend, early trading for NBP futures has seen the near months rise by around a penny over last night’s close while the winter contract is 1.42p down at 114.00p.  There is little change in contracts past the winter with the summer-24 contract just 0.68p lower on the last trade.  The prompt has still to kick off with a late start on a Friday now seeming customary.  In the crude oil markets, Brent is a touch lower on the last trade at $76.15 a barrel but uncertainty hangs over the market after yesterday’s comments from Alexander Novak.  
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