NBP futures continued to release premium this morning

15 September 2023

Gas Market

The UK gas market softened on Thursday bringing a stop to the recent upward trend due to supply concerns. Chevrons two Western Australian plants are continuing to export LNG, despite a step-up in strikes and a fault at the Wheatstone plant that cut production by a quarter. Freeport LNG’s natural gas intake at its plant in Texas inched up on Thursday but remained well below capacity for the sixth straight day with Freeport not making an official comment on the plant status or cancelations. The front month October contract settled 3.03 pence per therm lower at 89.27p while further out the curve the Winter-23 contract shed 2.80p on the session. On the prompt, the Within-day and Day-ahead contracts settled 1.00p and 4.20p lower respectively despite the UK gas system being undersupplied for most of the day.

Power Market

The GB baseload power market reversed some of its recent gains over the last week on the back of weak carbon and NBP markets on Thursday. Winter-23 contract took the brunt of the downward pressure, settling £3.04/MWh lower at 112.59/MWh. The Day-Ahead contract settled £4.26/MWh higher day on day. EUA and UKA carbon markets both fell fractionally on Thursday tracking the NBP and TTF gas markets. Dec-23 EUA settled at €82.95 a tonne, a decline of 81 cents over the session.

Oil Market

Global oil markets rebounded on Thursday with both Brent crude oil and WTI trading at 10-month highs as the expectations of a tighter supply outlook for the rest of 2023 over shadowed concerns over weaker economic growth and rising U.S. inventories. Despite a bearish U.S inventories report on Wednesday, there was only a brief temptation to sell which speaks volumes and underlines the market mentality of focusing on sufficiency of supply due to Saudia Arabia and Russia extending oil outputs cuts until the end of 2023.  As expected, the European central bank raised its interest rate to a record peak but signalled that this is likely to be its final move in its fight to tame inflation. The Brent front month November settled $1.82 a barrel higher at $93.70 after trading at a yearly high of $93.89 earlier in the session.

Markets this morning

NBP futures continued to release premium this morning. October is currently 1.94 pence lower than yesterday’s closing price, while further out the curve is also in negative territory in the early exchanges. On the prompt, the Day Ahead contract has shed 4.00p so far this morning despite the UK gas system being marginally undersupplied while the Within Day contract has yet to exchange hands. Brent crude oil has extended gains, setting another new yearly high at $94.00 a barrel.  
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