Following the long weekend in the UK the NBP gas market was a mixed basket on Tuesday. Following the recent sell off, near term contract out to September all traded higher on the back of reduced LNG send-out. Two key UK terminals, South Hook and Isle of Grain, both reduced send out while imports from Norway remain subdued due to ongoing maintenance. Buying interest in the expiring June contract also lent strength to the front month as it closed for the final time up 0.93 pence per therm at 58.29p. On the far curve the recent weakness continued as prices all opened lower and failed to move into positive territory across the session. Gas contracts took their lead from the weak wider energy complex with both oil and carbon markets falling across the day.
Despite the near curve strengthening on gas, power bucked the trend with carbon the key driving force behind the losses right across the spectrum. The far curve took the brunt of the losses with winter-24 losing £3.50 session on session. In its final session as the front month before expiry, June-23 lost £1.20 per MWh. In total over its final 5 sessions, the June contract lost almost £10.00 illustrating the collapse on energy markets. On the prompt power market, the drop in wind generation and drop in gas supplies from LNG and Norway helped to push day ahead power prices higher from last Friday’s close. Increasing by 6.5% day ahead was assessed at £69.25 per MWh at the close
On Tuesday, oil prices experienced a decline of $3.41 a barrel due to concerns surrounding the approval of the U.S. debt ceiling agreement by Congress. Over the weekend, Democratic President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy reached an agreement. However, there were indications that some conservative Republican lawmakers might oppose the deal to raise the U.S. debt ceiling. Despite this, both Biden and McCarthy maintained optimism that the agreement would ultimately be approved. Last week, in a possible signal suggesting a potential production cut by OPEC+, Saudi Arabia issued a warning to short-sellers speculating on oil price declines. However, remarks from Russian oil officials suggested that the world’s third-largest oil producer is leaning towards keeping output unchanged.
Markets this morning
Gas markets are quiet this morning with trading focused on the front month and front quarter. July, in its first session as the front month, has continued its uptick from yesterday opening in positive territory at 57.90 pence per therm. Winter-23 has yet to trade but indicative bid and offers have the contract opening at or just below Tuesday’s close. Oil has continued its downward trend despite some progress late last night on the US debt ceiling issue. Weak economic data from China has further dampened expectations of a recovery in the top importer of oil. Carbon too has seen its decline continue with all annual contracts below last nights close at the time of writing.