Gas Market
UK gas prices showed a strong upward trajectory in the early hours of trading yesterday, but eventually retreated to settle marginally higher day on day. LNG cargoes are starting to head towards the east, as LNG prices have started to increase there. However, strong storage build up and the industrial demand destruction has limited the upside as prices retraced in the afternoon to align with fundamentals. The NBP front month contract had a volatile day, opening lower day on day at 60.43p, before the market turned in early trading and reached a high of 70.17p before scaling back to in the afternoon to settle at 63.39p. The bellwether contract Winter 23 took the brunt of the upward push, gaining 3.14 to close at 109.24 pence per therm. On the prompt, the spot contract rose by 0.70p while the Day ahead was flat, up only 0.10p.
Power Market
Yesterday, prices in the GB baseload power market saw a slight uptick, due to gains in the UK gas market. The Winter 23 experienced the most significant increase, closing £4.00/MWh higher at £116.75/MWh. It has traded at an average of £115.59/MWh so far this month, a £32.18/MWh discount to the same period last month. Contracts along the front of the curve also pushed higher for the second consecutive session. Baseload for the day ahead moved in the opposite direction of the curve, closing £1.84 lower at £86.32/MWh. Ample wind powered generation supported the downward pressure, as wind accounted for 32% of yesterday’s GB electricity fuel mix.
Oil Market
Global oil markets lost value during Thursday session despite Saudi Arabia’s attempt to uplift the market. Price movement was primarily focused on demand fundamentals, with some industry estimates showing China’s oil inventory level’s increase which casts a shadow over how fast the Chinese economy is actually recovering. Additional macroeconomic pressure emanated from Europe, as the Eurozone officially slipped into a recession, with GDP shrinking by 0.1% over two consecutive quarters, meeting the typical definition of a recession. Brent crude front month peaked at $77.66 before falling back in the afternoon and closing at $75.96 a barrel. The West Texas Intermediate equivalent followed a similar downward trajectory, closing at $71.18 a barrel.
Markets this morning
NBP gas prices have opened higher this morning, with the front month contract last trading 4.71p higher at 68.10 pence per therm. The bellwether contract Winter 23 is yet to trade, however the bid and offer spread is ranging at approximately 112.00 pence per therm. This morning’s price movements are showing similar traits to the early hours of yesterday session. The UK gas system has opened balanced, with demand forecast at 137MCM, which is reflected in the stability of the flat prompt market this morning. In the wider fuel mix, carbon prices are edging higher, with the EUA Dec 23 contract last trading at €84.52 a tonne, up €0.53 from yesterday
09 June 2023
