NBP futures resumed an upward trend on Friday afternoon

10 July 2023

Gas Market

NBP futures opened firmer on Friday and after some relinquishing of early gains prices resumed an upward trend in the afternoon as near contracts settled higher by an average of 2.75p per therm.  The August contract added 2.61p to settle at 81.86p while over the week the front month declined by almost 10.00p.  Futures contracts from the winter out were left with gains of up to 5.56p on Friday and the Winter-23 product was just 0.32p lower week-on-week.  Prompt prices also ended the week on a high note with the Spot and Day ahead adding 2.70p and 3.50p respectively.  Gas for power demand is expected to pick up as temperatures rise this week and increase air-conditioning demand.  LNG deliveries to the UK for July are down on last year with a possibility of three cargoes arriving during the month.  

Power Market

GB baseload power futures ticked up on Friday with support from higher gas futures on the NBP and news of an outage at EDF’s Hartlepool nuclear reactor.  The No. 2 reactor which has a capacity of 620MW was taken offline at the weekend and could be offline for up to two months.  Their reactor at Torness is planned for maintenance for the back half of the month and will take 640MW offline. At the close, the August contract settled £1.05/MWh higher at £84.80/MWh while the Winter-23 contract closed at £127.00/MWh up £1.75/MWh on the day but over the week declined by £5.75/MWh.  

Oil Market

The crude oil markets were bullish on Friday with the markets responding to production cuts by Saudi Arabia and lower exports from Russia.  Brent settled at its highest level in over two months on Friday with the September contract closing at $78.47 a barrel, an increase of $1.95 over the day.  The global benchmark notched up another week-on-week gain, adding $3.09 a barrel over the last five days.  Last week Saudi Arabia committed to extending the voluntary production cut of 1 million barrels per day for July into August while Russia pledged to decrease exports of crude oil by 500,000 bpd from 01-August.  There are still concerns that the U.S. Fed and European Central Bank will increase interest rates in July which could slow economic growth and dent crude oil demand.    

Markets this morning

GB gas demand is pitched a touch higher at 132mcm this morning, and supplies are comfortable despite the low Norwegian imports and LNG send out. Prompt prices are flat although trading is thin.  NBP futures have switched tack from the opening and the early gains have been reversed with near months now showing losses.  The August contract last traded at 75.12p which is down 4.87p intra-day and below Thursday’s close.  The Winter-23 contract last exchanged at 132.69p, a decline of 1.49p from Friday’s close.  Brent is down 59 cents a barrel this morning with poor economic data from China weighing on early trades.    
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