The front three months on the NBP opened below last nights close

21 June 2023

Gas Market

UK gas markets pushed higher across most of the curve on Tuesday amid continued gas supply concerns from high levels of Norwegian continental shelf maintenance until mid-July. In another volatile session, the largest increase was in the front month July contract which was trading as high as 103.00 pence per therm earlier in the day and eventually settled up 10.32p on the day, closing at 96.46p/th. Winter 23, Summer 24 and Winter 24 contracts increased by 8.39p, 6.00p and 6.20p respectively while further out the curve was relatively flat.  The spot settled 13.2p up at 97.25p per therm while the Day ahead contract increased by 13.7p to close at 93.75p per therm due to lower pipeline gas flows from Norway to Britain and lower renewables generation increasing the demand for gas for power generation.

Power Market

GB baseload power prices climbed across the session pressured by rising gas and carbon prices. The front season, winter-23 gained £4/MWh session on session as gas prices increased, continuing to be buoyed by the high levels of maintenance on Norwegian gas fields. Day ahead power also increased as wind generation is expected to fall to levels 20% below seasonal norms, increasing the demand for more expensive gas fired generation. Carbon prices also increased day on day, with the Dec-23 contract reaching its highest level in two months. Intraday the price peaked at €96.00 per tonne before falling off prior to the close and finishing the session at €94.55 per tonne. Behind the increases, carbon was supported by European gas prices.

Oil Market

Brent crude experienced a slight decline of 19 cents, settling at $75.90 per barrel by close of trading on Tuesday. The market witnessed a volatile session as the outlook for oil demand remained uncertain, overshadowing the potential positive impact of China’s reduction in its benchmark lending rates. China’s rate cuts, although the first in 10 months, were not as aggressive as some had anticipated. Consequently, any substantial improvement in oil demand remains uncertain at this point. On the supply side, despite facing U.S. sanctions, Iran has managed to achieve new highs in both crude exports and oil output this year. Additionally, Russia is poised to increase its seaborne exports of diesel and gasoil during the current month. These factors are likely to outweigh the production cuts implemented by OPEC+ and its allies, including Russia itself.

Markets this morning

The front three months on the NBP opened below last nights close but have recovered some of their losses in early trading. All three contracts are currently trading below their latest settlement. Further on the curve only winter 23 and Summer 25 have traded so far, with both contracts opening effectively flat day on day. No trades have been posted on the prompt so far, with a system that is slightly short seeing bids and offers at levels in line with the close. Oil price movements are also muted with prices flat day on day, while carbon is retracing some of the gains, with prices falling from yesterday’s two month high.
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