Over the weekend Norway’s gas exports dropped to one of the lowest levels in many years

04 September 2023

Gas Market

The UK gas market displayed stability on Friday, with NBP contracts trading within a narrow range compared to the previous session. The front month contract October saw a marginal gain of 1.03p, settling at 86.76p, while the Winter 23 contract closed 0.13p higher at 124.55 pence per therm. One of the key focal points in the market is the ongoing situation at Australian LNG facilities. However, despite initial gains over recent sessions, the market has pulled back as the potential impacted LNG volume is expected to be minimal. Closer to home, an extra LNG cargo is anticipated to arrive in the UK this month, alleviating pressure on the near-term market. In total, three LNG cargoes are expected in September. Meanwhile, subdued demand contributed to losses in the UK prompt market, with the Within day and Day Ahead contracts closing at 81.00p and 82.50p, respectively.

Power Market

Limited price movement was recorded in the GB baseload power market on Friday, with the front month contract Oct-23 gaining £0.75/MWh while further along the curve contracts moved in the opposite direction. The rather muted sentiment mirrored the wider fuel mix, with a relatively flat sentiment witnessed in the UK gas market and European carbon. Baseload for day ahead deliver closed at £92.11/MWh, up £1.43/MWh on the day. The EUA carbon market traded slideways on Friday, with a lack of strong price drivers. The Dec-23 benchmark contract settled at €85.65 a tonne, down €0.38 a tonne.

Oil Market

Global oil prices experienced a decline on Friday, marking the end of two consecutive sessions of gains. However, it is worth noting that these losses were relatively minor, given the ongoing tightness within the global oil system. At the start of the session, Brent crude prices showed promise by opening in positive territory. Nevertheless, as the day progressed, they settled at $86.55 per barrel, down $0.31 on the day. The prevailing sentiment in the oil market is still heavily influenced by the anticipation of further supply cuts from major oil-producing nations such as Saudi Arabia and Russia. This expectation has contributed to the overall stability of oil prices. Furthermore, the market has received an additional boost from the fact that U.S. crude oil stocks have reached their lowest levels this year. This decline can be attributed to the increasing costs associated with storage and the unprecedentedly high demand for oil.

Markets this morning

Prices in the UK gas market have opened in negative territory this morning. The front month last traded at 85.64p down just shy of 1.00p from Friday’s settlement. The front quarter Q4-23 is also releasing risk premium, last trading 2.23p lower at 109.48p down 2.23 pence. Over the weekend Norway’s gas exports dropped by 40MCM, to one of the lowest level in many years, however the impact in the UK was limited as exports via Vesterled remained steady. In the wider energy markets, Brent crude has opened at $88.48 a barrel, a price not seen since November 2022, taking direction from supply concerns as Russia confirms production cuts.    
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