NBP futures took a further step lower on Wednesday after the sharp downturn on Tuesday with all contracts settling within a couple of pence of the previous settlement prices. Near term fundamentals are still looking very healthy with an abundance of LNG cargoes arriving in the UK in the next week, European storage levels at 99%, Norwegian gas flows increasing after the maintenance season and gas demand remaining below average for this time of year. The market opened weaker, with December-23 trading as low as 119.45 pence per therm. However, in what is becoming a familiar narrative recently, the market reversed direction in the afternoon with the new front month regaining most of the premium lost in early trading, settling down 1.76p on the day at 122.31p. On the prompt, the Day Ahead settled down 10.50p on average day on day.
UK baseload futures had limited price movement on Wednesday with contracts out to Winter 24 settling within one pound of their previous settlement. There was early pressure on contracts across the curve, continuing the sell off from Tuesday, however the market regained the premium lost in early trading with Jan 24, Feb 24 and Summer 24 all ending the day with modest gains while far curve contracts had marginal losses.
The Baseload Day-Ahead contract extended losses settling down £6.37/MWh over the session as wind generation for the period was revised upwards. EUA spot carbon settled at its lowest price since June 2nd
at €78.07 a tonne.
After a strong opening and both benchmarks trading up over two dollars a barrel, global crude oil markets eased as the dollar strengthened to settle at their lowest prices since the Israel-Hamas conflict began on October 7th
. A robust dollar makes it more expensive to buy fuel using other currencies, pressuring prices. The Federal Reserve kept interest rates unchanged as expected but did note that they would keep the door open to possible future rate hikes due to a strong U.S economy. Higher interest rates can slow economic growth and dampen oil demand. Early gains were a result of Iran calling on Muslim states to cease oil and food exports to Israel, igniting concerns that the conflict could spread throughout the Middle East. However, concerns alleviated when the first group of injured people were allowed to evacuate Gaza to Egypt.
Markets this morning
The UK gas market has had a quiet opening this morning with contracts across the curve trading within a penny of yesterdays settlement prices. December 23 had traded as high 126.00 pence per therm but most of that risk premium has eroded now, currently trading at 122.44p, a modest increase of 0.13p on the day. Summer 24 is currently trading 0.78p below Wednesdays settlement at 120.35p. On the prompt, the Day ahead is flat on the day while the Spot has yet to exchange hands. Brent crude is trading $1.25 a barrel higher in early exchanges while Dec-23 EUA carbon has declined by 74 cents a tonne.