The crude oil markets switched tack on Monday

20 June 2023

Gas Market

The GB gas markets started the week mixed with near futures settling marginally lower while contracts from next summer posted minor gains.  An unplanned outage at the Kollsnes field was shrugged off yesterdays as the NBP spot and day ahead products reversed some of the premium built in over last week.  The spot settled 4.45p down at 84.05p while the day ahead product yielded almost 2.00p to close at 80.05p.  Futures remained buoyed by the extension in Norway maintenance works announced last week by the Norwegian operator, Gassco, and the front month ended the session just a penny lower at 86.14p.  The winter contract eased by 0.81p to 130.67p.

Power Market

Stronger carbon prices fed into baseload futures on Monday countering downward pressure from the NBP curve.  The front month, July, settled £2.00/MWh higher at £98.00/MWh while the winter contract settled at £134.50/MWh, down £0.50/MWh.  Carbon EUAs gained over 1.0% with the spot EUA closing at €91.23 per tonne. The UK will continue to import power from the continent as nuclear and renewable outputs are set to ease this week.  Baseload for the day ahead edged higher as a result yesterday and closed £4.00/MWh up at £100.23/MWh.

Oil Market

After ending the week with two days of gains, the crude oil markets switched tack on Monday with growing concerns of China’s economy.  The world’s second largest crude oil importer has had its GDP growth forecasts for 2023 cut by several large banks and has started to ease interest rates as part of stimulus plan.  The second half of the year is when many have forecast China’s economy to rebound but the indicators heading into the third quarter have not restored confidence.  In the U.S. the active rig count was lowered for the seventh week running with 552 rigs in operation last week, down 4 from the previous week.  Brent for August delivery settled at $76.09, down 52 cents a barrel.  The U.S. benchmark, West Texas Intermediate, settled 48 cents lower at $71.29 a barrel.

Markets this morning

The NBP futures market has opened firmer this morning, but latest trades have eased off earlier highs.  The July contract peaked at 95.46p but has last traded at 90.76p which is 4.62p up on last night’s close.  The winter contract is just 2.83p higher, having last exchanged at 133.50p, down from a peak of 138.00p earlier.  Prompt prices have opened higher too, the day ahead last going through at 92.00p, a gain of 11.95p although trading on the prompt is thin.  GB gas demand is pitched at 140mcm for today and supplies are forecast 9mcm short.  The August contract for Brent has traded in a tight range this morning and is currently 67 cents up at $76.76 a barrel.  
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