GB baseload futures continued to decline on Friday

Gas Market

On Friday we witnessed the near NBP futures market fall for a third day running as the August fell by 6.36p to close at 63.66p on its final day of trading on ICE. The front season, Winter-23 shed 5.59p to settled at 117.49p and over the week was 8.38p down. Contracts further out averaged losses of around 3.0p on Friday as gas storage supplies across Europe continued to be replenished ahead of schedule.  On the prompt, forecasts for high wind generation which will displace gas fired generators continued to pile on the pressure as the Spot and Day ahead contacts yielded around 6.00p to close at 62.90p and 62.68p respectively.  

Power Market

GB baseload futures continued to decline on Friday with premium being eroded in response to lower gas and carbon prices on the day.  The front month, August shed £3.93/MWh to close at £68.75/MWh while the Winter contract settled at £114.50/MWh, down £4.13/MWh.  The Dec-23 contract for Carbon EUAs fell by 2.4% or €2.22 per tonne to end the week at €88.70 per tonne. Wind generation is forecast at around 20.0% above the seasonal norm next week which pressured the prompt on Friday.  Baseload for the Weekend contract was £52.32/MWh while for Monday, the Day ahead fell by £10.78/MWh to settle at £70.39/MWh.  

Oil Market

Early declines to crude oil prices were reversed on Friday as the market sees a tightening of supplies in August.  The International Energy Agency have forecast demand to outpace supplies this year and while the first half of 2023 has seen a draw on European and U.S. crude and distilled stocks, these have been offset by increases in Japan and China. There are hopes that the Chinese government will stir up demand for the back half of the year by introducing new monetary policies and the voluntary cut of 1 million barrels per day by Saudi Arabia in July is already starting to have an effect. At the close, Brent was 75 cents a barrel down at $84.99 a barrel.  

Markets this morning

Crude oil prices have opened flat this morning as the September contract is expiring today.  The last trade has gone through at $88.95 a barrel which is just 4 cents below Friday’s close.  On the NBP, futures have opened firmer with early trades for September, the new front month on ICE, just over a penny up while the Winter-23 contract has yet to trade.  Prompt prices are looking stronger too despite the GB gas system operating in balance with demand for today at 174mcm.  The day ahead product has ticked up by 1.63p to 64.30p with the Spot still to post a trade.    

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