UK gas markets settled higher for the third day in a row

31 August 2023

Gas Market

The UK gas markets settled higher for the third day in a row but gains yesterday were marginal and NBP futures are still on course to post a loss for the week.  The market opened softer but early losses were reversed over the course of the session as Norwegian outages raised concerns of delays in returns after the scheduled maintenance works.  The front month for the NBP curve, September, expired on the ICE platform yesterday and the contract settled 1.51p per therm higher at 89.81p. The Winter-23 contract closed at 131.75p, adding 3.19p on the day.  Prompt prices were buoyed by the drop in nominations for the Langeled line, but the spot remained below the previous settlement, closing 1.50p down at 87.50p.

Power Market

The modest gains on the NBP curve combined with an increase in carbon EUAs to prop up baseload futures yesterday. The September contract ticked up by £0.50/MWh to close at £87.75/MWh while the Winter settled at £124.28/MWh, up £1.53/MWh.  Carbon EUAs rose by 1.2% on average over the day and the Dec-23 contract settled at a euro higher €86.00 per tonne. Wind generation is forecast to fall below recent averages and is expected to drop to around 2.5GW at the weekend. The baseload for the Day ahead contract settled slightly lower at £91.21/MWh but averaging £82.65/MWh for the month.

Oil Market

There was a larger than expected drawdown on U.S. crude oil inventories last week which provided support to prices yesterday.  The Energy Information Administration released its weekly oil data for the week ending 25-Aug yesterday and reported that reserves of crude oil fell by 10.6 million barrels.  This far exceeded the expected drop of around 3.3m barrels based on industry surveys. Gains on the day were tempered as the fear of further interest rate increases still hang over the market after the U.S. Fed said he could not rule out another hike in interest rates at his recent address at Jackson Hole.  At the close, Brent for October delivery was up 37 cents to $85.86 a barrel.

Markets this morning

Natural gas prices for the NBP prompt and curve have opened softer this morning.  Latest trades have seen the near curve extend losses with October, the new front month on ICE down 3.59p to 93.94p.  The Winter contract is 2.60p lower at 129.15p with futures past this still to open their books for the day.  On the prompt, only the Day ahead contract has been active and has yielded 1.25p up to 10:00am.  In the crude oil markets, Brent’s October contract expires today, and focus has already turned to November which is up 29 cents to $85.53 a barrel.   The October contract for Brent last traded at $86.01 a barrel.
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