NBP futures relinquished some of the premium added during Wednesday’s sharp gains

Gas Market

It was another volatile session for the NBP futures market but the swings in natural gas futures prices were not as wide as was witnessed on Wednesday. The threat of striking action by workers at Australian LNG facilities rippled through the European energy markets on Wednesday creating fears that LNG tankers bound for Europe could soon be diverted to Asia to replace Australia’s LNG exports.  But there were no further developments yesterday and near months of the NBP curve opened higher with September peaking at 106.74p per therm but the upward movement was soon reversed as contracts traded in negative territory for much of the rest of the day.  The front month settled at 94.25p down 6.83p while the Winter-23 contract eased by 3.52p to 127.58p.  Prompt prices also moved into reverse gear as wind generation is expected to increase and the Spot and Day ahead declined by 6.00p and 7.50p respectively.

Power Market

The decline in near NBP futures weighed on the GB baseload power curve yesterday while losses to the longer curve were curtailed by gains in carbon EUAs.  The front month, September shed £4.50/MWh yesterday and settled at £88.50/MWh, the Winter-23 contract closed at £119.75/MWh down £2.25/MWh.  Carbon EUAs settled an average of 74 cent higher with the Dec-23 contract closing at €84.55 per tonne. Forecasts for increases in generation from wind and solar photovoltaic for the remainder of the week failed to pressure the Day ahead contract which settled slightly lower at £82.81/MWh yesterday.  Wind generation is expected to fall below the seasonal average next week.

Oil Market

Crude oil prices took a step back on Thursday as concerns of a further hike in U.S. interest rates receded while China’s latest economic data fails to live up to forecasts. Brent for October delivery fell by $1.15 to settle at $86.40 a barrel yesterday but remains on course to record its seventh weekly gain in succession. Losses to crude oil prices were curbed on the day by OPEC’s monthly report in which they expect market fundamentals to remain healthy in the back half of the year with its forecast for 2023 global oil demand to rise by 2.44 million barrels per day remaining unchanged. Crude oil prices have been buoyed by OPEC members reining in on production and exports and recently committing to let these voluntary cuts run into September.

Markets this morning

The Australian labour regulator has given the clearance for strike action by Australia’s LNG workers at Chevron’s Wheatstone & Gorgon LNG facilities but ballots for strike action have yet to be cast.  The NBP futures market did open softer earlier this morning, but latest trades have seen the losses to near curve slowly being eroded. The front month, September is 0.46p off yesterdays close but was almost 3.00p down earlier.  The Spot has continued to shed premium with higher wind generation curbing gas demand today while the Day ahead contract for Monday is marginally lower. Brent is 17 cents a barrel down at $86.23 a barrel.  

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