Global oil markets extended their recent upward push

25 July 2023

Gas Market

During the early hours of trading yesterday, the UK gas market saw limited movement, however as the day progressed contracts gained momentum and pushed higher. A recurring pattern emerged, indicating a clear build-up of risk premium primarily concentrated at the front of the curve, with the Aug-23 contract gaining 6.01p to settle at 76.83 pence per them. In contrast, increases were more modest further out, with Winter-23 edged 3.28p higher to close at 129.15p. Contracts along the NBP gas curve have gained modest value when considering the five day price movement. Premium between the UK Day ahead and the Dutch equivalent narrowed to less than 1.00p yesterday, with the NBP contract settling at 74.00p up 6.95 pence on the day. The prompt markets upward swing occurred despite stable European gas supplies.  

Power Market

GB baseload power future contracts increased on Monday, mirroring the upward trend of UK gas prices. The front month contract took the brunt of the gains, edging £4.50/MWh higher to settle at £78.75/MWh. Price increases were less profound in later dated contracts, as Winter 23 closed at £121.85/MWh up £1.35/MWh. Contracts across the curve are in positive territory when considering the five day average price movement, particularly Q1-24. Baseload for day ahead delivery ended yesterday’s session at £81.66/MWh, the contract has traded at an average of 74.84 throughout July. The recent upward momentum in the EUA carbon market came to a stop as the Dec-23 contract declined yesterday, settling at €91.35 per tonne

Oil Market

Global oil markets extended their recent upward push during Monday’s session, to mark three consecutive sessions of gains. The key factor’s supporting the upward trend is supply tightness on the back of OPEC+ and Russian curtailments alongside optimise that Chinese stimulus measure will reignite the second largest economy in the world. The Brent crude front month contract peaked at 82.81 a barrel before closing at $82.74, up $1.67 on the day. The last time the Brent crude front month reached this price level was early March. It appears that the oil market is starting to shrug off the impact of interest rate hikes, which had been a significant concern throughout the year.  

Markets this morning

Limited price movement in the UK market this morning, as the gas system opened balanced. The front month contract last traded at 78.59p up 1.76 pence per them from yesterday while Winter-23 is at 129.73p, less than 1.00p up on the day. In the prompt market the Day ahead contract last traded at 76.75p, edging 2.75p higher from settlement yesterday. The UK continues to export approximately 34MCM to the Continent via IUK and BBL interconnectors. Global oil markets have failed to maintain yesterday’s upward trend, with the front month last trading at $82.46. The market will continue to closely monitor China’s stimulus package to address its slow economic recovery.  
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