Gains were seen throughout the curve yesterday

19 July 2023

Gas Market

NBP futures regained some of the premium lost over the last week as an unplanned outage in the Aasta Hansteen gas field caused a little anxiety in the market that there could be unexpected extensions to the scheduled Norwegian maintenance next month. In August, the Troll field and Kollsnes gas processing plant will undergo maintenance as well, while the Vesterled pipeline will also have its capacity cut and will be completely offline for the next two days. Southern Europe is experiencing an intense heatwave which will increase gas demand for cooling although solar output has been very high. Gains were seen throughout the curve, with the front month August-23 contract closing up 5.10 pence per therm at 66.69 p/therm and Winter-23 settling up 6.39 p/therm at 121.87 p/therm.  

Power Market

The GB baseload power market tracked the NBP gas market, with gains seen across the curve. The largest increase was in the bellwether Winter-23 contract which settled up £5.25/MWh on the session at £118.00/MWh. Looking at the five-day average, only the front three months are in negative territory with further out the curve now in positive territory after yesterday’s gains. Baseload for the Day ahead was down £6.46/MWh over the session, settling at £81.58MWh. Carbon EUA’s traded sideways for most of the day but a late rally in the afternoon tracking gas prices resulted in the benchmark Dec-23 contract closing up €1.40 on the day at €88.18 a tonne.  

Oil Market

Brent Crude oil prices climbed more than a dollar on Tuesday as a weaker U.S dollar and expected decline in U.S. output outweighed lower than expected Chinese economic data. A weaker dollar makes crude oil cheaper for holders of other currencies. U.S retail sales rose less than expected in June which boosted expectations the U.S. Federal Reserve will stop hiking rates after a widely expected 25 basis-point increase at its July 25-26 meeting. Higher interest rates slow economic growth and reduce oil demand. Sluggish gross domestic product data from China kept a cautious lid on prices with some reservations in its demand recovery. China’s GDP grew 6.3% year-on-year in the second quarter compared to forecasts of 7.3%. Brent crude front month September-23 settled at $79.63, up $1.13 on the day.  

Markets this morning

The UK gas market opened slightly weaker this morning with the front month August contract currently trading down by over 1.00p/therm from yesterday’s closing prices. Further out the curve there has been limited trading with the bellwether Winter-23 contract the only contract that has traded so far, and it is relatively flat on the day, down by less than 1p/therm. The UK system has opened long this morning, with rising flows directed to the UK from Norway with Langeled being nominated at 66mcm/d up 10 mcm/d. Brent crude oil has breached the $80 level again, currently trading at $80.02 a barrel.  
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