In early trading losses on the near curve appeared to be continuing while the gains made on Monday on the contracts for winter-23 onwards were being retraced. The market appeared to be coming to terms with Norwegian maintenance schedule, as July dipped to 68.71p and winter-23 fell as low as 117.00p per therm. However, news broke just after 2pm of an extension to the maintenance at Norway’s Nyhamna gas processing plant from the 21st of June until the 15th of July which caused prices right across the board to spike. The front month traded as high as 92.60p before settling at 91.72p, while winter increased by 9.80p to settle at 130.86p per therm. Within day gapped upwards by 16.05p despite the fact the system remained only marginally short across the day with the maintenance extension having no impact on immediate gas availability.
The strong gas market fed into the GB power baseload market on Tuesday, as all contracts on the curve made gains versus the previous session’s close. Murmurings from the market believe that actual supply for July will not be tight, but the extended outage will mean that injections into storage will be drawn out longer, adding more risk to any other outages. The buoyant gas market pushed the July baseload contract up by £11.50 per MWh, closing at £100.50. Further along the curve, power was also supported by strong carbon pricing. High temperatures increase electricity demand for cooling across Europe, increasing the demand for carbon credits. The EUA contract tipped above €90 per tonne having traded in the €80 region for a number of days.
Global oil markets traded higher regaining some of the premium lost after three successive days of losses. China’s central bank lowered a short-term lending rate for the first time in 10 months, aiming to add momentum to a hesitant post-pandemic recovery in the world’s second largest economy and biggest crude importer, which could increase oil demand. Gains were limited as a rise in global supplies is weighing on the market, along with concerns about demand growth, ahead of a U.S. Fed monetary policy meeting concluding on Wednesday. Prices across the energy complex all increased on Tuesday adding to the upward momentum on oil. At the close, the Brent front month contract was up $2.45 a barrel closing at $74.29, while WTI settled at $69.42, up $2.30 a barrel.
Markets this morning
UK gas prices have opened weaker this morning, retracing some of yesterday’s gains. The front month contract July-23 last traded at 89.00 pence per therm, down 2.72p from yesterday. The Winter 23 contract has lost 2.36p and last traded at 128.50p, while further dated contracts are yet to trade. The UK gas system has opened balanced this morning. Total Norwegian exports are nominated to increase by 12 mcm/d to 259 mcm/d as the gas processing plant Kollsnes allows increased throughput. Flows to Langeled are picking up by 11 mcm. Global oil markets extended gains from yesterday, currently trading up $0.83 on the day after China’s central bank lowered a short-term lending rate.