NBP futures regained the premium lost in Tuesdays session

14 September 2023

Gas Market

NBP futures regained the premium lost in Tuesdays session on the back of further Norwegian maintenance extensions, cancellations reported at Freeport LNG and an announcement of planned maintenance on the BBL pipeline. The brunt of the upward pressure was on the front month October contract which ended the session 5.33 pence per therm higher at 92.30p and when we look at the last five days is now up 16.99p over that period. There were modest gains further out the curve with the Winter-23 and Summer 24 contracts settling 3.94 and 2.82p above Tuesday’s closing prices respectively. On the prompt, the Day ahead and the within day contracts settled an average of 2.95p higher spurred by news of extensions to maintenance at both Troll and the Aasta Hansteen gas fields.

Power Market

GB baseload contracts tracked the NBP gas and carbon futures movements with gains seen across the curve on Wednesday. The Winter-23 contract settled £3.43/MWh higher at £115.63/MWh posting its fourth positive day out of the last five trading days. Wind-power production was revised upwards for the rest of the week which resulted in the Day-ahead contract settling £1.30/MWh lower. EUA carbon contracts rebounded strongly on Wednesday, after the Commitments of Traders data showed further rise in Investment Funds’ net short positions with a late surge in gas prices adding further support.

Oil Market

Oil prices edged lower on Wednesday, after earlier hitting a 10-month high as a surprise build in crude inventories offset expectations of tight crude supply for the rest of the year. U.S. crude inventories rose by 4 million barrels in the last week, confounding analysts’ expectations for a 1.9-million-barrel drop. The voluntary production cuts by Saudi Arabia and Russia of 1.3 million barrels per day to the end of the year will lock in a substantial market deficit through the fourth quarter, the International Energy Agency (IEA) said on Wednesday limiting the downward pressure from the U.S. stock increase. Forecasters are expecting the European Central bank to raise interest rates at its meeting on Thursday. The November contract settled 18 cents higher at $91.88 a barrel, after trading as high as $92.84 a barrel, the highest since November 2022.

Markets this morning

NBP futures have released some of the premium gained in yesterday’s session this morning. The Winter-23 contract had traded as low as 109.90 pence per therm earlier in the session but has bounced slightly and last traded at 111.05p, down 1.47p from yesterday’s settlement. On the prompt, the Day-ahead contract is currently trading 4.2p lower despite the UK gas system opening undersupplied by 21 mcm/d this morning. Brent crude is currently trading 65 cents a barrel higher as the market focuses on tighter global supply while EUA carbon Dec-23 EUA carbon is little changed this morning, currently trading 4 cent a tonne lower than Wednesday’s settlement.  
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