Late sell off yesterday sees the Gas Market open weaker

06 July 2023

Gas Market

The NBP market oscillated between gains and losses throughout the day due to mixed news on fundamentals. Pipeline supplies to from Norway continue to improve as some maintenance has ended but there was an announcement that an outage reducing 104 million cubic metres (MCM) per day at the Troll field has been extended a further four days to July 10 while demand remains muted, with June gas consumption 15% lower than the 2017-2021 average. European storage levels are still ahead of schedule for this time of year at 76%. The front month Aug-23 contract traded as high as 88.99p but eventually settled down 2.29p on the session at 84.49 pence per therm while the Winter-23 contract was flat on the day and further out the curve was up slightly on the session. On the prompt, within day was flat on the day while Day ahead, settled down 2.1 pence per therm on the day.  

Power Market

The decline in the NBP gas market front months weighed on GB baseload contracts at the front of the curve, while prices further out the curve were pressured by the 7.7% drop in UKA carbon and the 2% drop EUA carbon contracts on Wednesday. The front month, August settled £3.30/MWh down at £87.20/MWh, while the Winter contract shed £2.00/MWh to close at £127.00/MWh. The Day ahead contract settled £5.63/MWh higher to close at £91.55/MWh. The UKA Carbon prices shed 7.7% yesterday retracing the gains earlier in the week after the UK government announced a new cap to tighten industrial emissions.  

Oil Market

Global oil markets gained on Wednesday, with the WTI contract gaining 3% on the session, narrowing the price gap with global benchmark Brent in a post-holiday response to supply cuts announced on Monday by top oil exporters Saudi Arabia and Russia. Saudi Arabia said on Monday that it would extend its voluntary output cut of 1 million barrels per day (bpd) to August while Russia is lowering their August output by 500,000 bpd. Market participants awaited inventories reports after the Fourth of July weekend which is peak U.S travel season. Gains were limited as the market attention is still focused on interest rates, with U.S and European central banks expected to increase rates to address stubbornly high inflation. The front month September contract for Brent rose by 40 cents settling at $76.65 a barrel.  

Markets this morning

The NBP market has opened weaker this morning after a late sell off into the close yesterday. The front month August 23 contract is currently trading near it’s lows of the day at 81.98p down 2.51 pence per them on the day while the Winter-23 contract has also shed 1.43p on the session so far. On the prompt, the UK system has opened oversupplied this morning by 6.2mcm which has seen the Day ahead contract shed 2.25 pence per therm as gas demand is down at 126 mcm with high winds forecasted. Brent crude is currently trading near its highs on the session at $76.94, up $0.29 on the day after opening lower and as low as $76.22.  
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