NBP contracts continued to shed risk premium yesterday, as the losses marked the third consecutive session of declines. The front month contract December-23 experienced a volatile session, opening at a high of 114.25p before falling to close 3.53p lower at 108.68p. Longer-dated contracts were more resilient to the volatility, with Summer-24 closing at 108.00p, only 1.15p below the intraday high. Gas for delivery in 2024 closed at 112.19p on average yesterday, this reflects a significant discount from its peak of 519.78p on the 26th of August in 2022. Although current prices remain elevated compared to pre-energy crisis levels, they have moved away from crisis levels. In December, the UK is forecast to receive seven LNG cargoes, with the majority set to come from the United States.
In tandem with the UK gas market, GB baseload power futures extended their losses on Tuesday. However, losses were limited when compared to the previous session, as the front month contract December-23 closing £1.50/MWh lower at £96.25/MWh. The front season Summer-24 hit a 15 session low to close at £95.75/MWh. In the prompt market, prices moved in the opposite direction. The prevailing downward trend in the power market found support from weakness in the carbon market. The EUA Dec-23 contract experienced a loss of €0.56, closing at €72.52 per tonne, while the Spot contract closed at €72.41 per tonne.
Global oil markets clawed back above the $80 price mark during yesterday’s session, taking direction from a weaker U.S. dollar coupled with an expected OPEC+ supply cut announcement on Thursday. The Brent crude front month opened at $80.19 a barrel and continued to extend its gains as the day progressed, eventually closing at $81.68 a barrel, up $1.70 on the day. The U.S. dollar reached a three month low on Tuesday, reflecting economic concerns in the world’s largest economy. A weaker U.S. dollar tends to increase the price of oil as it makes oil more affordable for buyers in other currencies. Despite the positive momentum witnessed yesterday, Brent crude still displays a decrease of $0.77 per barrel over a five-day average.
Markets this morning
Sentiment in the UK gas market is flat this morning, with contracts showing minimal movement, failing to surpass 1.00p. The front month contract last traded at 108.27p while Summer-24 is trading at 107.95 pence per therm. The UK gas system has opened oversupplied despite robust demand reaching 361MCM. Gas storage withdrawals of 63MCM and elevated LNG regasification levels standing at 82MCM, are supporting the network. In the wider energy fuel mix, both Brent crude and EUA carbon markets have seen an uptick, with the EUA Dec-23 contract last trading at €73.18 a tonne.
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