During Friday’s session, the UK front month contract continued its downward trend. However, contracts further along the curve experienced marginal increases due to lingering concerns, particularly related to weather risks during the winter season. These price movements occurred despite record high storage levels. The front month contract August lost 1.07p, settling at 63.39p, reaching its lowest level since late May. While the benchmark contract, Winter 23 saw a slight increase of 2.42p, closing at 116.80p. Although there were gains across the curve on Friday, the market continued to experience a decrease in risk premium over a five-day average price movement average.
The GB baseload power market lacked a clear direction on Friday, as contracts across the curve moved in opposite directions. However, when considering a five-day average, all contracts remain in negative territory. The front month contract for August experienced a slight increase of £1.00/MWh, settling at £75.50/MWh, whereas the Winter 23 contract shed £0.32/MWh to close at £114.88/MWh. In the EUA carbon market, the benchmark contract for Dec 23 settled at €86.40, reflecting an increase of €0.51 per tonne on Friday. There were no substantial price movements in recent sessions, likely due to prevailing concerns about economic growth.
The global oil markets experienced a positive opening on Friday morning, but as the day progressed, the market gradually declined, eventually settling at $79.87 a barrel, marking a decrease of $1.52. Initially, the market was supported by supply disruptions in Libya and Nigeria, which contributed to the early gains. However, the strength of the US dollar reversed the market’s direction and turned it negative. It is a well-known observation among market analysts that the strength of the dollar can undermine the price of oil. Since crude oil transactions are predominantly conducted in dollars, an increase in the value of the dollar often limits the rise in crude oil prices. The US West Texas Intermediate crude followed the trend of the global crude oil market and ended the session at $75.42 a barrel, reflecting a decrease of $1.47.
Markets this morning
UK gas contracts have opened lower this morning, taking direction from ample Norwegian supplies which are nominated at their highest level since April. Nyhamna gas processing plant has returned to full capacity, while the outage at Kollsnes is also resolved. The front month contract August last traded at 62.45 pence per therm, down just shy of 1.00p from Friday’s settlement. Losses are clearly evident in the prompt market, as the Day ahead contract last trading at 59.00 pence per therm, a price not witnessed since late May. The Brent crude market is attempting to claw back Friday’s losses, last trading at $80.01 a barrel.