NBP futures have failed to hang onto the premium gained on Monday

26 September 2023

Gas Market

NBP futures extended gains on Monday on the back of Norwegian supply concerns, with the brunt of the upward pressure on the contracts that are set to expire later in the week. The Skarv gas field extended maintenance until October 8th and there were unplanned outages at the Sleipner and Troll fields.  There was extra volatility in the October-23, Q4-23 and Winter-23 contracts with their last day of trading is on Thursday. We saw a similar speculative run in the market before Summer-23 expired at the end of March with the premium eroding in early April from the market straight after the contract expired. The front month October settled 10.57 pence per therm higher at 112.73p, the fifth consecutive positive session. On the prompt, the Day-ahead contract settled at its highest price since April at 111.50p, an increase of 6.50p day on day.

Power Market

GB baseload futures climbed through Monday’s session, tracking gains in the NBP gas hub with gains curbed by a decline in both UKA and EUA Dec-23 contracts. The front month October continued its recent upward trend, settling £3.70/MWh higher at £95.50/MWh. The Day-Ahead contract settled £13.68/MWh higher as wind output for the rest of the week was revised lower. After a strong open, EUA carbon reversed course amid pressure from weak auction results while ignoring the sharp gains in TTF gas prices on Monday. The Dec-23 contract settled 54 cent lower at €84.75 a tonne.

Oil Market

Global oil prices did not stray too far from Friday’s settlement in choppy trading on Monday as Russia relaxed its fuel ban and investors factored in the risk of higher interest rates that could curb demand. Russia has adjusted some changes to its fuel export ban, lifting the restrictions for fuel used as bunkering for some vessels and diesel with high sulphur content.  However, there is still a ban on all types of gasoline and high-quality diesel which was announced last week. Last week, the Federal Reserve comments raised concerns that interest rates could stay higher for longer, reducing oil demand. The U.S. dollar index strengthened on Monday to its highest since November 2022. A stronger dollar makes oil more expensive to holders in other currencies. The Brent crude front month November contract settled 2 cents higher at $93.29 a barrel.

Markets this morning

NBP futures have failed to hang onto the premium gained on Monday in early trading this morning in what is looking like another volatile session. At the time of writing the front month October is trading at 105.65 pence per therm, down 7.08 from yesterday’s settlement. Further along the curve, contracts have also opened softer, with Winter-23, Summer-24 and Winter-24 shedding 6.04p, 4.06p and 4.37p respectively early doors. On the prompt, the Within day and Day-ahead contracts are on down 3.00p on average. Brent crude has drifted 99 cents a barrel lower in early trading while EUA carbon Dec-23 has continued to slide this morning, down €1.07 a tonne from yesterday’s closing price.
Learn how Kore Energy can help you to develop a sustainable energy management system