NBP futures steadied the ship on Wednesday with contracts across the curve settling with modest gains. The increase was capped as fundamentals remain strong with storage across Europe at over 96%, mild weather forecasted for October and a healthy supply of LNG vessels expected to dock in the UK over the next two weeks. After a sluggish start to being the front month, November had a small price bounce, settling 3.72 pence per therm higher at 95.95p, after declining by 17.53p in the previous three sessions. Summer-24 ended a seven-day losing streak, posting a 2.99p gain, closing at 110.89p. On the prompt, the Within-Day and Day-ahead contracts settled on average 5.65p higher, rebounding from the two-month lows traded on Tuesday.
GB baseload contracts settled with marginal gains on Wednesday tracking the UK gas and EUA carbon market with gains limited due to losses in UKA carbon and coal. Summer 24 was the biggest mover of the day, settling £2.25/MWh higher at £99.00/MWh. The Day Ahead contract closed £10.52 higher as wind generation forecasts were revised down by 6% for the rest of the week. Dec-23 EUA carbon bounced by €2.30 a tonne on Wednesday driven by short covering and strengthening TTF gas prices. Trading volumes surged in yesterday’s session, as 35mt changed hands for the Dec-23 contract on the ice exchange as market participants look to build up their future positions.
Global oil prices took a sharp downturn on Wednesday as the market focused on the implications of interest rates staying higher and the knock-on effect to demand despite pledges by Saudi Arabia and Russia to continue crude output cuts to the end of 2023. A persistent sell off in global bonds pushed U.S 30-year Treasury yields to 5% for the first time since 2007 and German 10-year yields to 3%, moves that could accelerate a global economic slowdown. There is a growing sense that interest rates in major economies will remain at high levels for longer to curb inflation and in turn reducing demand in oil. Torrential rain which brought flooding to New York in late September has resulted in demand destruction with gasoline consumption at its lowest in 22 years. The front month December settled at $85.81 a barrel, a decline of $5.11 a barrel.
Markets this morning
NBP futures have opened weaker this morning, failing to hang onto the risk premium gained during yesterday’s session. The brief price bounce on Wednesday looks short lived as the front month November contract is currently trading 2.61 pence per therm lower while the Summer-24 contract has shed 1.89p. On the prompt, the Day-ahead contract is currently trading 4.05p lower as temperatures are set to step up sharply. In the wider energy mix, Brent has extended losses, currently trading 76 cents lower at $85.05 a barrel while EUA carbon has opened fractionally lower.