NBP futures regained some of the premium lost earlier in the week

03 November 2023

Gas Market

NBP futures regained some of the premium lost earlier in the week on Thursday after a late rally into the close as news broke of US sanctions against project Artic LNG 2. Fundamentals remain robust with a plethora of LNG expected in the UK in the coming weeks and European storage levels above 99%.  For much of the day, the recent downward trend looked set to continue with Summer-24 trading as low as 118.50 pence per therm. In what is becoming a regular pattern, the market reversed direction in the afternoon and after some buying in the eleventh hour, the front season settled up 1.67p at 122.79p. It was another volatile session on the prompt with the Within Day and Day Ahead settling 15.33p higher on average as LNG tankers struggled to unload cargoes at UK ports due to high winds which also impacted operations at several wind turbines.

Power Market

UK Baseload futures stayed relatively stable on Thursday as the gains in the UK gas market were offset by losses in UKA carbon contracts. Summer 24 settled down £0.38/MWh on the day at £101.00/MWh while Winter 24 was flat over the session. The Baseload Day Ahead declined by £3.60/MWh as wind generation was forecasted higher as Storm Ciaran hit UK shores. EUA Dec-23 carbon traded at a year to date low of €76.24 a tonne on Thursday afternoon before some late dip-buying just before the close, settling at €79.06, an increase of 56 cents a tonne over the session. Trading volumes were above average with 34 mt changing hands on the ICE Dec-23 contract.

Oil Market

Brent crude oil pushed higher on Thursday as the U.S. Federal Reserve left interest rates unchanged. Although the FED didn’t give any didn’t give any indication of decreasing interest rates any time soon, the reaction in financial markets would suggest many traders believe that world interest rates have finally peaked. Aggressive interest hikes could slow down the economy and dent oil demand. Focus remains on the Israel-Hamas conflict with fighting continuing around Gaza city as Israeli forces step up their ground invasion. Fears remain that the conflict could spread throughout the Middle East and disrupt supplies around the region. Brent for delivery in January settled $2.22 higher at $86.85 a barrel.

Markets this morning

NBP futures have extended gains this morning across the curve as the market reacts to the news of further sanctions from the US on Russia which could impact the project Artic LNG 2. The front month December 23 is setting the pace, currently trading 5.08 pence per therm higher at 129.55p while Summer 24 is trading 3.19p above yesterdays settlement price at 125.98p. On the prompt, contracts have yet to exchange hands. The UK gas system has opened marginally short this morning. Brent crude oil is relatively flat in early trading while EUA carbon near term contracts are trading with minor gains.
Find out more about our Commercial Energy Services