Gas Market
UK gas markets continued to release premium on Thursday, for the second consecutive session. Healthy near term fundamentals including high storage levels and continued lacklustre industrial demand has weighed on the market. While there are still concerns over the lingering uncertainty over the length and extent of outages at Norwegian gas infrastructure, the market appears to shrug them off yesterday. The biggest losses were seen in the front month July contract which settled down 6.47 pence per therm at 85.35 p/therm, with smaller decreases seen across all of the curve. On the prompt, the Within day shed 8.55 pence per therm while the Day-ahead contract was down 7.25 p/therm as wind forecasts increased and British gas demand fell by 9% over the same period.
Power Market
GB baseload power prices took an additional step down during Thursday’s session, taking direction from the weakness in the wider fuel mix. The final quarter of 2023 took the brunt of downward pressure, shedding £7.50/MWh to close at £127.25/MWh. However, despite yesterday’s losses, the majority of the baseload curve remains in positive territory when considering the five-day average. Baseload for day ahead delivery was relative flat yesterday, closing at £107.64/MWh. Wind generation remained below seasonal norm, while solar generation accounted for 19% of yesterday’s GB electricity mix. The GB baseload Day ahead contract has averaged at £82.36/MWh so far this month.
Oil Market
Global oil markets faced a decline in value on Thursday as market sentiment was swayed by macroeconomic factors. The US Federal Reserve Chair’s announcement of additional interest rate hikes aimed an inflation crisis, and the unexpected interest rate hike by the Bank of England, created an atmosphere of uncertainty in the market. The anticipation of higher interest rates in two major economies raises concerns about potential slowdowns in economic growth, reduced consumer spending, and subsequent impacts on oil demand. The Brent crude front month contract opened at $76.96 and continued to unwind as the day progressed, eventually closing at $74.14 a barrel, down $2.98 day on day. Yesterday’s losses were curtailed by reports from the Chinese government that its nationals economic recovery has begun to show signs of improvement.
Markets this morning
UK gas prices have picked where they left off this morning, with a clear downward trend. The front month contract July last traded at 80.10p, down 5.25 pence per therm from yesterday’s settlement. The bellwether contract Winter 23 is also unwind some of the recent risk premium, with its last trade recorded at 129.00p. The UK gas system is marginally over supplied this morning, which has allowed storage withdrawals to flip to injection today. One Quatrain LNG cargo is expected to arrive into the UK this morning. The Brent crude front month contract continues to fall, last trading at $72.94 a barrel while EUA Dec 23 carbon contract has dipped below the €90.00 a tonne mark, last trading at €89.63 a tonne.
23 June 2023
