The recent trend of NBP futures switching direction mid-session continued Thursday after early gains were reversed late morning, and contracts continued to ease after a break for lunch. The near curve settled an average of 2.99p lower, with the front month, December, down from an intra-day high of 120.45p to settle at 115.47p, falling 2.68p from the previous close. The Quarter-1 product declined by 3.68p and settled at 123.58p, which is just over a penny above its 10-day low. Prompt prices also moved into negative territory yesterday amid a comfortable gas system despite one of the highest daily demands seen for the winter so far. The Spot closed 3.25p down while the Balance-of the month eased by 5.35p.
The change in the direction of the NBP futures market added to pressure from lower carbon prices on Thursday as the GB baseload power curve settled lower. The front month, December, eased by 1.9% or £1.85/MWh, while the average loss for the near curve was £2.00/MWh. After the recent gains, there was a burst of selling activity in the carbon markets yesterday as the Spot for EUAs settled €2.62 lower at €76.82 per tonne. The baseload for the day ahead eased slightly on Thursday as the contract settled at £119.84/MWh. Wind generation is forecast at around 2.0GW for Friday but is expected to increase for the weekend while temperatures are expected to remain above the norm.
Crude oil prices tanked on Thursday as Brent fell to its lowest level since early July. The January contract for Brent shed $3.76 a barrel to settle at $77.42 a barrel, while the February contract settled a little above that at $77.51 a barrel. The market is close to shifting to a contango, where near months are discounted to longer curve contracts and can indicate the market is oversupplied. In a contango, buyers are encouraged to purchase at lower prices and store oil for later use. The markets have shrugged off the recent views from OPEC and the International Energy Agency that pointed to an increase in activity through Quarter-4 and focused on the data from China and the U.S., which raise fears that demand is falling.
Markets this morning
Yesterday’s slide in crude oil prices has been halted this morning as the markets have recovered some of the significant losses with Brent last trading 78 cents higher at $78.20 a barrel. NBP futures are oscillating between losses and gains as contracts are within +/- 1.50p of yesterday’s close. On the prompt, the only active contract is the Spot, which is up 0.75p, and this is likely to be a reaction to the National Grid forecasting a deficit of 20mcm on the gas system today. Carbon prices have traded in a tight ranged and are flat to yesterday’s close.
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