NBP futures settled up to a penny lower on Wednesday after a fairly calm day in the market.

09 November 2023

Gas Market

The NBP futures market was a little calmer on Wednesday as contracts settled with marginal losses.  Trading ranges on the near months were tight with spreads kept to a 3 or 4p per therm spread as December peaked at 117.80p, while the low of the day was 113.89p.  The front month settled near the higher end at 116.12p but still posted a loss on the day.  Contracts out to Summer-24 all settled with losses of up to a penny as the market shrugged off concerns of disruption to LNG supplies from the Middle East and sentiment switches to the current low demand and ample storage reserves in Europe. Mild temperatures and high wind generation have curtailed gas demand in the UK this week, however, a revised forecast for wind generation for the end of the week supported the NBP prompt yesterday as contracts settled just over a penny higher on average.

Power Market

GB baseload futures settled mixed on Wednesday with support from UKA carbon vying with pressure from falling NBP futures.  The front month, December, settled £0.25/MWh lower at £97.000/MWh.  Carbon UKAs settled an average of 5.0% higher yesterday while EUAs didn’t stray too far from the previous day’s close as the Dec-23 contract settled at €75.33 per tonne. A revised forecast for wind generation provided support to the Day ahead product yesterday as it settled £11.79/MWh higher. Wind generation provided around 39.6% of UK power demand yesterday taking top spot in the power stack while natural gas generators met around 23.2% of demand.

Oil Market

Demand worries in China and in the U.S. pressured crude oil prices yesterday as the global benchmark shed over two dollars a barrel.  The January contract for Brent has lost $5.64 a barrel over the last two trading sessions as concerns of the spread of the conflict in the Middle East have faded. Inflation data from China is due on Thursday and there is little optimism after its exports of goods diminished according reports earlier in the week.  Demand fears received another blow from industry data from the American Petroleum Institute which showed a build of 12m barrels of crude over the last week.  The official data is normally released by the Energy Information Administration on Wednesday afternoons but will be delayed until next week due to systems update.

Markets this morning

The GB gas system is forecast long today despite demand rising to 240mcm. The markets are focused on the higher demand, which is almost 20mcm above Wednesday’s levels and have opened stronger.  The Spot is almost a penny higher at 106.00p while the Day ahead last traded at 109.00p, 2.25p up on yesterday’s close. NBP futures are trading higher too with December, the front month, 3.68p up at 119.80p.  Elsewhere, carbon EUA contracts are around 40 cent a tonne higher while in the oil markets Brent for January delivery is up 65 cents to $80.19 a barrel after falling by $5.64 a barrel over the previous two days.
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