Gas Market
Yesterday’s NBP gas market saw prices settle marginally higher for the third consecutive session. However, the market remained uncertain as contracts fluctuated between negative and positive territory throughout the day, reflecting the ongoing uncertainty in its overall direction. Notably, the seasonal contract for 2024 experienced the brunt of the upward push, with the Summer 24 and Winter 24 contracts adding an average premium of 2.92p per therm, settling at 131.78p and 145.38p, respectively. European gas storage levels remain high at 82% fullness yesterday, which may lead to full capacity well ahead of the upcoming winter. In the prompt market, the Dutch TTF and UK Day ahead contract remained coherent, with the NBP Day ahead settling a modest 1.33p below the TTF equivalent at 69.50p per therm. The upward push observed in the prompt market yesterday was not reflective of the current healthy fundamental picture.
Power Market
For the third consecutive session the majority of the GB baseload power market edged higher yesterday. The front month contract August took the brunt of the upward pressure, gaining £2.75/MWh to close at £75.75/MWh. The Summer 24 contract also pushed £2.75/MWh to settle at £115.50/MWh, its highest level since July 7th. Gains in the wider energy fuel mix supported the upward trajectory in the GB power market. Carbon prices bounced higher yesterday, with the EUA Dec-23 contract moving €1.86 higher to settle at €90.84 a tonne. The driving force behind this upward momentum lies in the anticipation of an impending cut in auction volumes scheduled for August, which has encouraged buying activity.
Oil Market
Yesterday’s session in the Brent crude oil market saw the price peak at $80.27 per barrel before falling back marginally to settle at $79.64. Throughout the session, the market struggled to find a balance between supply and demand fundamentals. A key factor affecting supply was the production cuts implemented by Saudi Arabia and Russia, which will continue to led to a tight supply situation. However, any significant price movement continues to be counterbalanced by weak macroeconomic data and interest rate hikes, which may affect demand dynamics. Russia is expected to reduce its supplies by 370,000 barrels per day in July compared to its initial plan of 2.23 million bpd. Additionally, Russia intends to further decrease exports by more than 100,000 bpd in August compared to July levels. These developments indicate ongoing supply complexities in the global oil markets.
Markets this morning
This morning, NBP gas prices have commenced with an upward trajectory, benefiting from abundant liquidity, uncommon for a Friday morning. The front month contract August last traded at 73.63p per therm, up 3.27p from yesterday while Winter-23 has last trade at 128.50p. The UK gas system is balanced, with demand forecast at 175mcm. The current healthy Norwegian imports have effectively offset the recent shortage of LNG supply to the UK, ensuring that demand is adequately met. Upward momentum is evident in the wider energy fuel mix also this morning, with the EUA Dec-23 contract trading at €91.30 a tonne while Brent crude has surpassed $80 a barrel.
21 July 2023
