Early trading the UK NBP market saw contracts opening weaker as the market extended losses for the third session in a row. The system was slightly short on opening but with several gas supply assets due to return from maintenance sentiment was generally positive. The key development occurred in the early afternoon when Shell announced that they are on track to restart their Nyhamna gas processing plant as planned on July 15th. The front month August-23 contract had just turned positive retracing earlier losses in the day, but the Nyhamna news resulted in a sharp 6.00p sell off. All contracts out to Q1-25 are now trading at a 20-day low with the front month down by 17.07p per therm over the last three sessions. The front Winter settled at 114.90p while Summer 2024 is now priced at 116.10p, down 2.96 p/therm on the day and just 15.00 above its recent low before the issue at Nyhamna.
GB baseload contracts tracked the bearish gas and carbon markets continuing the recent downward trend as prices fell at the front of the curve on Wednesday’s session. The front month contract August settled at £73.80/MWh, down £13.40/MWh over a five-day average, while Winter 23 ended the day £1.80 /MWh closing at £114.35, its lowest level since June 7th. Baseload for day ahead delivery closed £6.45/MWh higher at £83.67/MWh. The benchmark Dec-23 EUA Carbon contract opened the day higher but soon reversed into negative territory after weak auction results. NBP and TTF gas losses had an impact on the further EUA decline, with Dec-23 contract settling at €85.83 a tonne, down €1.22 on the session.
Global oil prices rose on Wednesday with the Brent front month contract breaching $80 a barrel for the first time since May, after U.S. inflation data gave hope that the Federal Reserve may have less interest rate hikes in store in the future. U.S. data showed slight increases in consumer prices in June, their smallest annual increase in more than two years. Higher interest rates slow down economic growth which results in lower demand for oil. Prices also drew support from a weaker dollar and optimism surrounding Chinese stimulus. The IEA expects the oil market to stay tight in the second half of 2023, citing strong demand from China and other developing nations combined with supply cuts from leading producers like Saudi Arabia and Russia. The front month Sep-23 contract traded as high as $80.55 but finally settled at $80.11, up $0.71 a barrel.
Markets this morning
The UK NBP gas market briefly opened higher this morning but quickly reversed and continued the recent downward trend with Norwegian flows improving. The UK system opened 7 mcm short but is now relatively balanced. The front month August 23 contract, traded as high as 67 pence per therm on the open, but is currently trading at 63.55 p/therm, down 1.245 p/therm on the session while further rout the curve is yet to trade. On the prompt, the day ahead contract has traded 2.25 pence per therm lower. Total Norwegian exports are flat on the day at 264 mcm/d due to delays at the Troll maintenance. In the wider energy mix, Brent crude oil is currently still trading in positive territory at $80.39, down slightly from its highs of $80.63 a barrel.