There was a welcome fall in energy prices on Monday after the sharp gains recorded last week. NBP futures and prompt contracts yielded significant premium on the day as the healthy fundamentals weighed. GB gas demand rose due to a cool start to the week, but demand remained around 20mcm below the seasonal norm and with temperatures forecast to rise to the norm next week NBP prompt prices for the weekend and next week shed over 20.00p. On the curve, November declined by 15.53p while the Summer dropped 8.55p to settle at 132.61p. Unions at Chevron’s LNG plants in Australia reaffirmed plans to commence strike action on Thursday while talks for a resolution continue. A deal to improve pay and conditions had been brokered by the Fair Work Commission and while the unions called off the industrial action, they revoted for strike action last week blaming Chevron’s management on reneging on the deal. The two plants at Gorgon and Wheatstone supply around 6.0% of global LNG supplies.
The fall in NBP futures and carbon EUAS pressured the GB baseload curve on Monday. The front month, November, settled £14.90/MWh down at £111.00/MWh while the Summer contract closed at £117.65/MWh having declined by £7.20/MWh. Carbon EUAs reversed the gains recorded on Friday as the Spot settled at €82.76, down €2.47 per tonne. The Dec-23 contract shed €2.26 to close at €83.40 per tonne. Baseload for the day ahead was also pressured by the fall in the NBP prompt and forecasts for wind generation to rise above 8.0GW. At the close the contract settled at £112.91/MWh, having shed £17.09/MWh from Friday’s settlement.
A deal between the U.S. and Venezuela to ease sanctions drew closer yesterday as both sides to continue talks this week. The U.S. has some political demands including Venezuela holding a fair and democratic presidential election in 2024 and in return could ease sanctions on oil exports. Venezuela exported an average of 1.9m barrels per day in the three years before the U.S. imposed sanctions in 2018, while exports in recent months are around a half a million barrels per day. Crude oil prices also eased with hopes that the conflict between Hamas and Israel will be confined to Gaza. Brent has only gained just over $5.00 a barrel since the first weekend attacks by Hamas indicating the conflict is not expected to impact oil production by Israel’s neighbours. The December contract settled at $89.65 a barrel yesterday, down $1.24 a barrel.
Markets this morning
There’s still some volatility evident in the gas markets this morning with November, the front month for the NBP trading between 116.12p and 123.70p so far. The latest trade has gone through at 118.87p which is 2.30p below last night’s close. Further out the curve, the Summer contract is just 0.35p down at 132.25p. Prompt prices have been slow to shift off last night’s levels, but the Day ahead is down 4.55p to last exchange at 102.50p. Brent is marginally higher this morning with the last trade going through at $89.77 a barrel.