UK gas prices concluded Friday’s session with a modest decline, extending the downward trend observed over the past three sessions. Despite ongoing maintenance work on Norwegian gas infrastructure during the summer, the persistent weakness in industrial demand has continued to pressure overall gas demand. The front month contract July experienced a decline of 5.07p, closing at 80.28 pence per therm. A considerable drop of 22.75p from its monthly high of 103.00p recorded on June 15th. Losses further along the curve were relatively less significant, with the benchmark contract for Winter 2023 experiencing a decrease of 3.00p, settling at 129.25 pence per therm. NBP prompt market also closed lower on Friday, with the Within day and Day ahead contract closing at 78.75p and 79.40p respectively.
GB baseload power prices continued to release premium in Friday’s session, tracking the NBP gas markets. The near months took the brunt of the downward pressure, with Q3-23 shedding £5.10/MWh to close at £191.15/MWh. The losses were less significant out the curve, with the Summer 24 contract decreasing by £2.75/MWh to close at £112.00/MWh. Baseload for day ahead delivery was down £11.43/MWh yesterday, closing at £84.00/MWh. session. The EUA Dec-23 contract closed down on Friday’s also, losing €3.30 to close at €87.58 a tonne. The downward movement in the carbon market tracked the decreases in the European gas markets.
Brent crude oil prices continued to slide on Friday’s session after Thursday’s central bank actions. The Bank of England unexpectantly raised interest rates by a bigger-than-expected half a percentage point while central banks in Norway and Switzerland also raised rates. Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce the oil demand outlook. The concern over economic growth has caused anxiety in the market that outweighed lower U.S. crude stocks and other signs of tighter supplies. Saudi Arabia is set to cut production by 1 million barrels per day in July. The front month contract closed down $0.29 per barrel, settling at $73.85 a barrel.
Markets this morning
NBP gas market has regained some of the premium lost in last week’s trading this morning, as there is still concern over Norwegian maintenance extensions. The front month July contract was trading as high as 91.63p but has retraced some of the gains and is currently trading at 85.51p, up 5.23p on the session while the Winter-23 contract is trading up 5.50 pence per therm. On the prompt, the Within day contract has opened higher, currently trading up 8.25p as the UK system has opened undersupplied this morning with demand at 138 mcm. Oil prices have had a volatile opening this morning. Both Brent crude and WTI were up as much as 1.3% in early trading but have retraced those gains now with brent crude currently trading down $0.18.