Brent Crude extended losses on Thursday

06 October 2023

Gas Market

NBP futures recent downward trend resumed in yesterday’s session after a brief respite on Wednesday. The prompt contracts and front of the curve bore the brunt of the downward pressure as mild weather is forecasted in the UK in the coming weeks resulting in demand being way below seasonal averages. There was very little reaction in the market to the news that workers at two Chevron liquefied natural gas facilities in Australia voted to restart strikes at a meeting on Thursday, potentially disrupting global LNG supplies. The front month November settled at 89.87p, its lowest level since late in 2021. On the prompt, there was a sharp decrease in the Within Day and Day ahead contracts, settling down 11.00p and 14.00p respectively pressured by unseasonably mild temperatures and muted demand. An uptick in Norwegian gas flows via Easington terminal added to the downward pressure.

Power Market

GB baseload power prices unwound risk premium on Thursday on the back of weak NBP and EUA carbon markets. The front month November contract settled at £87.00/MWh, down £12.75/MWh over the last five trading sessions. The Day-ahead contract slumped by £14.84/MWh with strong wind output forecast for Friday and solar-power production 10-20% above averages. EUA carbon tracked TTF gas prices lower on Thursday with Dec-23 settling €1.25 lower at €80.75 a tonne. However, the UKA carbon market settled with marginal gains, capping the losses on the GB power curve.

Oil Market

Global oil contracts took a further step lower on Thursday as the bleak economic outlook which is creating demand uncertainty weighed on the market. Prices continued to slide after the biggest daily decline in over a year on Wednesday caused by the strong greenback, sluggish equity markets and rising bond yields. The OPEC+ panel made no changes to the groups output policy with Saudi Arabia continuing with its voluntary cut of 1 million barrels per day (bpd) until the end of 2023, while Russia will keep a 300,000 bpd export curb until the end of December. Russia said there was no deadline on lifting the ban on fuel exports to fight high domestic gasoline and diesel prices. The Brent front month November contract settled $1.74 Lower at $84.07 a barrel.

Markets this morning

NBP futures have regained some of the premium lost in yesterdays session. After shedding over 15.00 pence per therm so far this week, November-23 has seen a small price bounce currently trading at 91.98p, up 2.11p on the session so far. On the prompt, the Within Day contract has yet to change hands while the Day-Ahead contract is currently trading 3.95p above Thursday’s settlement. Brent crude oil prices have steadied the ship in early trading after the drastic sell off over the last two sessions, currently trading 11 cent a barrel higher while carbon is trading fractionally higher.
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