UK gas prices rallied in late trading on Tuesday afternoon

20 September 2023

Gas Market

Throughout most of Tuesday’s session the gas market was oscillating close to Monday’s close as the market showed all the signs of consolidating much of Monday’s losses. However, prices spiked in the afternoon, with the majority of the volatility limited to the near-term contracts. The front month October increased by 9.1p per therm from the day’s low, before settling at 93.59p/th a day-on-day gain of 6.07p.  All curve contracts followed a similar pattern, but the price movements were more subdued further on the curve. Winter-23 gained 2.32p while Winter-24 increased by 0.91p, with the contracts closing at 122.49 and 141.73p respectively. Behind the price increase was another delay to the return of Troll from maintenance triggering fears in the market of a repeat of the Nyhamna issue earlier in the summer. Adding to the upward momentum was news that China had bought 30 cargos of LNG for delivery this winter.

Power Market

Prompt contracts on the GB baseload power market fell dramatically from day to day with the Day ahead contract being assessed at £51.28/MWh. Behind the decline was the strong forecast increase in wind generation overnight across the UK, pulling the day ahead baseload contract to its lowest level seen since March 2021. However, losses were not extended to the curve where the majority of contracts tracked the late surge on gas markets to increase from Monday’s close. October increased by £3.25/MWh to close at £84.50/MWh having traded sideways for most of the session.

Oil Market

Global oil prices looked to be extending their recent upward trend as prices continued unabated to a new 10-month high, before easing prior to closing. November the front month Brent contract, closed at $94.34 a barrel, down 9 cents, having hit an intraday high of $95.96. Similarly, WTI recorded an intraday high of $93.74/barrel before settling at $91.20. Supply concerns are still the main driving force behind the relatively strong prices following the previous extension of the production cuts by Saudi Arabia and Russia until the end of the year. Compounding the fear of a supply shortage into quarter 4 was the release of weak shale oil production data from the US. The released data has indicated that shale oil production is expected to fall to a 5-month low.

Markets this morning

The NBP market has continued from where it finished yesterday afternoon with prices continuing their upward trajectory fed by the Troll issue. Only the near four months have traded thus far, with all 4 contracts increasing by an average of 4.03p per them. October is the biggest mover of the lot increasing by 6.47p from last night’s close. Oil has continued yesterday evening’s price trend with losses continuing this morning. The November Brent crude oil contract last traded at $93.21 a barrel a further decline of $1.13 from last night’s close  
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