Yet another uneventful session characterized the UK gas market yesterday, as contracts continued to hover within a narrow price range of 2.50p. On its final trading day, the front month October contract closed 0.94p higher at 100.35p. Notably, this contract has maintained an average trading price of 91.78p throughout September, marking a 6.27p discount compared to the preceding month’s average. The Winter-23 contract concluded its last day of trading at 118.59p, and while the gas winter season is just around the corner, the prevailing mild and favourable weather conditions continue to limit the impact on heating demand. In the prompt market, the Within day contract broke the 100.00p price barrier to settle at 101.05p while the Day ahead product closed at 98.55 pence per therm.
The GB baseload Winter-23 contract concluded its trading session yesterday, hitting a new yearly low at £106.75/MWh, highlighting the market’s increasing confidence as we near the winter season. Additionally, power prices demonstrated stability, remaining firmly within a narrow trading range of approximately £2.00/MWh for the second consecutive session. For longer-dated contracts, there was a slight upward movement. GB baseload for day ahead delivery made an attempt to recover from the prior session’s heavy losses, settling at £78.50/MWh, which marked a gain of £10.85/MWh for the day. This aligns with the monthly average of £82.67/MWh, consistent with the previous month.
Global oil prices started the trading day on a high note yesterday, remaining elevated due to persistent supply concerns. The front month contract surged to $97.69 per barrel during the early hours, but a late selloff saw it close at $98.38 per barrel, down $1.17 from the previous session. The initial upswing in prices can be attributed to recent data highlighting an uptick in US demand coupled with a continual decline in their crude oil inventories. However, the sustained uptrend in oil prices is raising concerns about its potential impact on economic activity, thereby amplifying the motivation for potential interest rate hikes. This lingering unease prompted traders to secure their profits yesterday, ultimately causing gains to reverse into losses.
Markets this morning
Gas prices have started the day in negative territory this Friday morning, with the new front month November contract last trading at 107.50p, marking a decrease of 2.26 pence compared to yesterday’s closing price. As market fundamentals remain unchanged NBP gas contracts are appearing to show stability. In the prompt market contracts have also opened lower despite the UK gas system being slightly undersupplied. UK storage injections have increased to 28MCM, from 10MCM yesterday while exports to mainland Europe have decreased. A gradual unravelling of risk premium from oil markets is evident this morning, as the Brent crude front month last traded at $95.07 per barrel.