Gas Market
The UK gas market experienced flat price movement on Friday, although all contracts remained in negative territory over a five-day average. The front month contract reached a peak of 56.62 pence per therm before retracing and closing at 54.95 pence per therm, up 0.68 pence per therm on the day. It was a volatile week overall, with prices initially rising before retracing. The Q1 24 contract has been the only product on the NBP curve to hold a premium over its TTF equivalent, suggesting that higher levels of supply uncertainty in Britain for the second quarter of gas winter compared to the Netherlands. Wholesale natural gas spot were also relative flat on Friday, with limited movement on stable fundamentals. The Day ahead contract closed at 56.65p, up 0.60p per therm on the day.
Power Market
Limited price movement was recorded in the GB baseload power market on Friday, with the front month gaining £0.25/MWh to close at £70.00/MWh. The power market grappled with market fundamentals, as UK gas prices slightly increased, while the carbon market recorded modest losses. The baseload curve prices remained in negative territory over a five-day overview, indicating the prevailing weakness. Baseload for day ahead delivery closed at £64.44/MWh on Friday, trading at £66.98/MWh on average in June. The EUA Dec 23 contract closed at €78.85 a tonne, down €0.13 day on day, taking direction from losses in the wider fuel mix.
Oil Market
During Friday’s session, oil prices experienced an upward push, primarily driven by the anticipated output cut by OPEC+ in light of their upcoming two-day meetings in Vienna. The market’s attention pivoted towards closely monitoring the progress in resolving the US debt ceiling crisis, which further influenced oil prices. The expected output cut, once approved, would mark a significant reduction of 4.5% of global demand attributable to the OPEC cartel. OPEC+, which includes Saudi Arabia and Russia, pumps around 40% of the world’s total crude and its policy decisions tend to impact oil prices and its movements. The front month for Brent crude settled at $76.13 per barrel on Friday, representing an increase of $1.85. While the West Texas Intermediate contract rose by $1.64 to close at $71.74 a barrel on Friday.
Markets this morning.
Prices have opened in positive territory in the UK gas market on this Irish Bank Holiday Monday, however liquidity is thin. The front month contract July last traded at 57.02 pence per therm, up 2.07 from Friday’s close while Winter 23 is yet to trade. In the prompt market the Day Ahead contract has opened 2.35p higher at 59.00 pence per therm. It appears the spot market is unfazed by the undersupplied gas system this morning. Ongoing shutdowns of several large Norwegian gas fields until mid‐June will restrict gas flows into the UK which relies heavily on Norwegian gas. The Brent crude front month last traded at $76.17 marginally in line with Friday’s close.
05 June 2023
