Gas Market
Friday’s session in the UK gas market commenced with a notable upward trajectory, signalling strong buying activity. However, as the day unfolded, the intraday gains gradually faded, and contracts along the curve underwent a reversal and eventually erased their early gains. The Winter 23 contract peak at 132.50p per therm, only to retreat and close at 125.86p. Similarly, the front month contract August witnessed a high of 77.65p, but concluded the day at 70.82p per therm, recording a marginal increase of less than 1.00p. The abrupt shift in market sentiment indicated the presence of significant selling pressure and a lack of sustained upward momentum. In the prompt market, volatility was less evident as the Within day and Day ahead contracts ended the day at 70.50p and 67.05p respectively. As of Friday, the Day Ahead contract in the UK gas market has averaged at 74.02p in July.
Power Market
On Friday GB baseload power contracts initially showed signs of modest gains. However, as the day progressed, intraday gains faded, and ultimately the contracts settled lower by the market close. This shift in sentiment was in line with the movements observed in the UK gas market. The front month contract August, experienced a decline of £1.50/MWh, closing at £74.25/MWh. Despite Fridays losses, contracts are still higher over a five day average. Despite the marginal declines on Friday, GB baseload power contracts are still higher when analysing the five-day price movements. In parallel, the EUA carbon market recorded another session of gains, with the spot contract surpassing the €90 price mark to settle at €90.20 a tonne.
Oil Market
In a continuation of its upward trajectory, the global oil market displayed resilience on Friday, marking a second consecutive session of gains. The Brent crude front month contract reached $81.07 per barrel, reflecting a notable increase of $1.43. The driving force behind this upward momentum is a tight supply picture. Last week, US crude inventories experienced a significant decline, attributed to an upswing in crude exports. This has further tightened the supply dynamics, and amplifying the upward momentum. In addition, OPEC and Russia has implemented supply cuts that have added considerable pressure to the already strained supply scenario. While unplanned outages in Libya, Nigeria, and Northern Iraq have lent support to the upward trajectory of prices.
Markets this morning
The UK gas market has opened higher this morning, with the front month contract last trading at 73.60p, up 2.78p per therm. The Winter-23 contract is also moving higher, last trading at 128.50p, an increase of 2.64p from Friday’s close. The UK gas demand is forecast at 180MCM which is being met by robust supply. Exports from the UK to the Continent via IUK are nominated at 29MCM today, a slight increase from Friday. The EUA carbon market has picked up where it left off, as the market is taking direction from the impending auction supply reductions in August which are expected to half supply. The EUA Dec-23 contract last traded at €92.10 a tonne.
24 July 2023
