Limited price movement in the UK gas market

16 November 2023

Gas Market

Yesterday’s price movement in the UK gas market was unclear, as contracts opened on a positive note but struggled to sustain those gains throughout the day. The front month contract December 2023 hit a peak of 124.11p before closing at 118.15p. Meanwhile, the Summer 2024 contract ended the day 0.52p lower at 119.62p. Strong intraday price swings have become a consistent theme in recent sessions, despite market fundamentals remaining largely unchanged. In the NBP prompt market, contracts moved upwards in response to robust gas for power demand, particularly in the absence of wind generation. The Day Ahead contract gained 7.00p, settling at 106.05 pence per therm.

Power Market

GB baseload power contracts lacked any clear direction once again yesterday, with the front month contract December edging £0.60/MWh higher to settle at £99.10/MWh, while Q1-24 moved in the opposite direction, shedding £1.25/MWh to close at £113.75/MWh. The Summer 24 contract closed at £101.75/MWh,  a £6.57/MWh premium to its yearly low of £95.18/MWh on the 6th of November. Baseload for day ahead delivery made strong gains during yesterday’s session, as wind generation remained 20% below seasonal norm. The contract moved £36.27/MWh higher to close at 122.56/MWh, its highest point in 30 sessions.

Oil Market

Brent crude peaked at $83.04 during Wednesday’s session, before scaling back to end the session at $81.18 a barrel, down $1.29 on the day. The market displayed a downward trend yesterday, mainly influenced by a 3.6 million barrel increase in US crude inventories, despite robust demand. In contrast, positive macroeconomic indicators emerged from China, with an uptick in industrial output from the world’s second largest economy. Global oil markets have stabilised, putting aside geopolitical tension in the Middle East and the potential for supply concerns. It is worth noting that the Middle East possess approximately 48% of the world’s oil reserves.

Markets this morning

This morning’s UK gas market has opened with an upward trend, as the front month last traded 1.73p higher at 119.88 pence per therm while Summer-24 contract is fractionally higher at 0.63p. The UK gas system has opened balanced this morning with strong Norwegian flows supporting the system, this is reflected in a muted prompt market. The IUK flows are currently at zero due to planned maintenance which began this morning and is set to be completed on the 30 November. Global oil markets  have opened weaker this morning, with the Brent crude front month last trading at $80.90 a barrel.    
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