European gas prices jumped higher yesterday

06 June 2023

Gas Market

European gas prices jumped higher yesterday, with the near curve taking the brunt of the upward drive. The front month contract July closed 12.27p higher at 67.22 pence per therm while Q3 23 made strong gains, settling 10.99p higher at 72.88p. Maintenance operations affecting capacity at several gas facilities in Norway supported the uptick in prices. NBP prompt prices also pushed higher during yesterday’s session, with an unplanned outage at Barrow gas terminal influencing the upward sentiment. The undersupplied gas system supported injection to storage withdrawal of 13MCM in the UK. The Day ahead contact closed approximately 18% higher at 69.05p while the TTF equivalent moved 23% higher.  

Power Market

GB baseload power near curve rallied on Monday, with the front month July gaining £10.25/MWh to close at £80.25/MWh. Further along the curve gains were limited, with Winter 23 closing at £120.00/MWh up £5.50/MWh. The upward push was influenced by gains in the UK gas market alongside carbon prices.  The EUA Dec 23 contract closed at €82.85 a tonne, up €4.00. Baseload for day ahead delivery closed at £72.70/MWh on Monday, up £3.26 day on day. Wind generation remained over 10% below seasonal norm which supported the price movement.  

Oil Market

Global oil market closed higher on Monday, marking the third consecutive session of gains. The positive momentum was primarily driven by the recent announcement of voluntary production cuts from Saudi Arabia, which are scheduled to come into effect from the beginning of July. Saudi Arabia plans to reduce its output from 10 million barrels per day to 9 million barrels per day. However, this upward rally proved to be short-lived as concerns over the economic backdrop resurfaced. The latest data from the U.S. manufacturing sector indicates a persistent contraction for seven consecutive months. This has adversely affected the demand for fuels. Despite these concerns, the Brent crude front month closed at $76.71 a barrel on Monday, up $0.58 on the day. Similarly, the West Texas Intermediate settled at $72.15 a barrel.  

Markets this morning

The UK gas market has opened weaker this morning, as it attempts to unravel yesterday’s gains. The front month contract last traded at 64.37p down 2.85 pence per therm while Winter 23 is trading at 109.50p. The UK gas system is undersupplied once again, with demand forecast at 172MCM. Despite the short system prompt contracts are also in negative territory, with the Day ahead contract last trading at 67.25 pence per therm. Prices in the global oil markets have flipped into decline, with the front month last trading $1.44 lower at $75.27 a barrel.
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