UK gas prices have opened on a clear downward trajectory

13 June 2023

Gas Market

The UK gas market opened weaker yesterday, however as the day progressed far curve contracts pushed higher to close in positive territory for the fourth consecutive session. While the front of the curve posted losses. This divergence between near delivery contracts and the far curve has been a recurring trend in the gas market recently, indicating the presence of uncertainty leading up to the upcoming winter. The Winter 23 contract gained 1.71p to settle at 121.06p while July the front month peaked at 79.29p before closing at 75.63 pence per therm. On the prompt, the day ahead contract was down 4.00p at 76.05 pence per therm, a 8.32p discount to the Dutch equivalent. Aggregated European storage levels remain robust at 69% fullness.  

Power Market

Movement in the GB baseload power market was mixed during Mondays session amid increased volatility in the UK gas market. The front month contract July settled marginally higher day on day at £89.00/MWh while the bellwether contract Winter 23 shed £0.62/MWh to close at 125.38/MWh. The GB power market has maintained its net import position through June so far, which explains the premium European markets. Baseload for day ahead delivery closed at 84.14/MWh yesterday, up  £11.74/MWh. Wind generation remained weak, at 20% below seasonal norm. In the EUA carbon market, strong gains were observed yesterday, with the Dec 23 contract closing €2.07 higher at €88.23 a tonne.  

Oil Market

Global oil markets continued their downward drive yesterday, to mark three consecutive sessions of losses. after analysts highlighted Rising global supplies and concerns about demand growth just ahead of key inflation data and a U.S, Federal Reserve meeting later this week has encouraged the recent trend. Market participants have slashed their forecast for oil prices by 10%, citing weak demand in China and a glut of supply from sanctioned countries, including Russia. Russian oil exports to China and India have grown despite the implementation of the European Union’s embargo and the Group of Seven’s price cap mechanism that took effect in early December. At the close, the August contract for Brent was $2.95 down at $71.84 a barrel, while WTI settled at $67.12, down $3.05 a barrel.  

Markets this morning

UK gas prices have opened on a clear downward trajectory this morning. The front month contract July last traded at 69.72 pence per therm, down 5.91p from yesterday and below yesterday’s prompt market. The Winter 23 contract has lost 3.66p and last traded at 117.40p, while further dated contracts are yet to trade. The UK gas system has opened marginally undersupplied at 13MCM however Norwegian exports to the UK are forecast to increase as Troll gas field comes out of maintenance. Global oil markets have opened in positive territory this morning, as the market attempts to recover yesterday’s losses, the Brent crude front month last traded at $72.79 a barrel.  
Find out more about our Commercial Energy Services