The week ended with more volatility for the NBP futures market

28 August 2023

Gas Market

The week ended with more volatility for the NBP futures market with Norwegian outages limiting gas flows while potential strike action by Australian LNG workers also adding some upside.  Gas flows to the UK through the Langeled feeder were down to just a trickle on Friday as the scheduled maintenance works continued at key platforms in the North Sea.  There was hope that the dispute by Australian LNG workers could be resolved but union workers at the Wheatstone platform have continued to ballot for strike action with results due on Monday.  The September contract for the NBP was heavily traded going into the UK bank holiday weekend and settled below it’s high for the day of 89.03p per therm at 86.65p, gaining 6.33p day on day.  The Winter-23 contract settled 3.92p higher at 126.17p, but was still almost 10.00p lower week-on-week.  Prompt prices for the Week ahead and Balance of month moved over 9.00p higher on Friday.

Power Market

With the Carbon EUAs and UKAs settling fairly flat on Friday, the GB baseload power market took its lead from the movement on the NBP futures market.  The front month, September, settled £4.60/MWh higher on the day which reduced the loss for the week to £1.75/MWh.  The Winter-23 contract added £4.10/MWh on the day cutting the weekly loss to almost half at £4.75/MWh. Wind generation is to drop below the weekly average for the week with forecasts for Monday at just over 3.0GW. Prompt prices rose on the back of the poor forecast and on gains in counterparts on the NBP prompt, as the day ahead settled at £102.42/MWh, up £8.62/MWh.  

Oil Market

The Chair of the U.S. Federal Reserve, Jerome Powell, said that progress has been made in curbing inflation but advised that further interest rate hikes may be required in his address at the Annual Jackson Hole Economic Policy Symposium on Friday. Crude oil prices rose despite the bearish sentiment for demand growth in his speech. The dollar rose to an eleven-week high against a basket of currencies which was countered by news of a fire at a Louisiana refinery and a drop in the number of active oil rigs for last week which was down by 8 to 512.  While Brent added $1.12 a barrel on Friday, over the week the price was down 32 cents a barrel, bringing the consecutive weekly loss count to two.  

Markets this morning

It’s a U.S. bank holiday today so the gas and power markets will remain closed for the day.  The GB gas system is running with a slight deficit against todays forecast demand of 126mcm with gas nominations for the Langeled line at 6mcm for today.  In Europe, gas futures at the Dutch hub, the TTF, have opened with declines of around 2.20p per therm in early exchanges while trading in the crude oil markets also continues with Brent 24 cents up at $84.72 a barrel.    
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