NBP futures contracts continue to shed premium

Gas Market

NBP futures contacts continued to shed premium on Friday as the UK headed into a long weekend.  The declines on the seasonal contracts for the front winter and next summer averaged almost 6.00p while the near months eased by around 2.00p on the day.  This brought the loss for the week for the front month, June, to 11.00p, while the winter has shed 14.36p over the last five days.  Summer prices edging towards more normal price levels has led to risk premium being eroded from the longer curve.  Europe’s replenishment of gas storage reserves being ahead of schedule along with plenty of LNG deliveries to Europe and the UK, have eased supply concerns for the coming winter somewhat.  

Power Market

The weak near curve on the NBP pressured baseload futures on Friday.  Carbon EUAs ticked up while EUKs remaining flat countered some of own downward movement on the day.  The June contract for baseload settled £0.40/MWh down at £71.00/MWh while the winter contract closed at £121.25/MWh, down £3.10/MWh which was the biggest loss on the day. Generation from wind was below recent averages towards the back end of the week but forecasts have improved for the week ahead and this pressured the prompt.  Baseload for the day ahead settled £6.18/MWh down at £65.25/MWh.  

Oil Market

U.S. government officials appeared to near an agreement to raise the debt ceiling on Friday providing some support to crude oil prices on the day. Although it has to be noted talks concluded on Friday without an actual agreement, signs were positive that a deal could be put in place with some further negotiations over the weekend. OPEC+ are due to meet in Vienna next Sunday and confusion still hangs over the market following recent statements on production from the Russian Deputy PM seemingly contradicting earlier words from the Saudi Energy minister.  At the close the July contract for Brent was 69 cents a barrel up at $76.95 a barrel.  

Markets this morning

Today is a public holiday in the UK, many European states and is a Federal holiday in the U.S. so markets will be closed for the day.  There will be some activity on-line for crude oil and following the agreement by the U.S. congress at the weekend to raise the debt ceiling, crude oil prices have increased marginally with Brent for July delivery trading 24 cents up at $77.19 a barrel.  The GB gas system is forecast 7mcm shy against today’s demand of 170mcm.  

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