The fundamentals surrounding the UK gas market remained unchanged on Thursday with low LNG deliveries combining with the lack of Norwegian supplies to leave futures slightly higher at the close. The near curve flip-flopped between gains and losses earlier in the session but trading ranges on the day remained quite tight. The July contract expired on the ICE platform yesterday and this may have encouraged a tick up in prices late in the session. The lead month settled 1.85p up at 86.43p per therm. The contract for quarter-3 also expired yesterday and closed at 88.47p, returning a gain of 2.18p on its final day. Prompt prices settled mixed yesterday as the spot eased by 0.75p while the day ahead product added 0.75p. The GB gas system operated in balance for much of the session and demand was 145mcm.
Near months on the baseload power curve settled flat on Thursday while contracts from the winter out posed minor gains on the back of increases to NBP futures. July stayed flat at £89.00/MWh, but the winter contract added £1.50/MWh to close at £128.00/MWh. The carbon markets have been volatile of late, but trading ranges remained tight yesterday with the Dec-23 contract for EUAs closing 9 cent down at €88.09 per tonne. Prompt prices softened yesterday with wind generation set to increase going into the weekend. Baseload for the day ahead declined by £9.59/MWh to £86.90/MWh which is around £3.50/MWh above the average price for the month.
Crude oil prices consolidated Wednesday’s gains yesterday after both benchmarks posted minor gains. The hangover from the weekly report from the Energy Information Administration was enough to hold off fears of further interest rate increases yesterday. On Wednesday, the U.S. government body reported a much larger than expected draw on reserves of crude oil for the week to June 23rd. Stocks of U.S. crude oil were down 9.8m barrels compared to the expectation of 1.8m barrels. Interest rates are expected to be increased again in July with both Jerome Powell, the U.S. Federal Reserve Chair and Christine Lagarde from the ECB, hinting at modest hikes recently. Saudi Arabia is to reduce production by 1 million barrels per day from Saturday but it’s efforts to tighten supplies have failed to support the market so far.
Markets this morning
NBP futures have softened this morning, but early losses have been pared back. August, the new front month for the NBP on ICE was down to a low of 84.05p but the latest trade has gone through at 86.54p, down 0.80p from last night’s close. The winter is down 2.14p at 129.20p but the bid/ ask spread is suggesting the contract will be less than a penny down on the day. Prompt prices remain unchanged so far while the gas system is forecast long against today’s demand of 131mcm. Crude oil prices have continued to strengthen this morning with Brent 85 cents up at $75.19 a barrel.