The market recovered yesterday following the heavy losses over the last three sessions with the market recognising the strong fundamentals across Europe. Contracts yesterday made minor gains following the large sell offs as traders reassessed their positions. In its first session as the front month the January 2024 contract opened in negative territory only to push to a high of 109.30p/th before declining before the close and settling just 1.47p/th higher at 107.13p/th. European storage levels have decreased in the last week from 98.4% to 95.93%. Gas from storage facilities has been used to meet the increased heating demand due to the cold weather across the continent, but the various grids right across Europe have been comfortably able to meet the increased demand.
Reflecting the muted movements on the gas market price movements on the power market were minimal. The spread between Q1-24 and Q2-24 widened across yesterday’s session having narrowed over the three previous days, tracking the gas input cost, and the belief that the system is well placed to handle any increased demand in Q1-24. In its final session Dec-23 continued its slide as it closed the session £1.85/MWh lower at £89.90/MWh. The Dec-23 EUA carbon market reached a 13-month low yesterday. The contract traded in a narrow band across the day before dipping to the low of €70.43/tonne just prior to the close. Prices shrugged off technical signs that should have seen the prices rebound to trade and settle lower.
As news hit the market that the OPEC+ group had reached an agreement to continue its oil supply cuts, the front month contract increased to an intraday high of $84.75/bbl, before declining to $82.83 a barrel. The initial price gains were based on rumour and conjecture that were soon reversed following the official announcement from OPEC+. The group announced cuts of almost 2 million barrels per day, with Saudi Arabia continuing its current 1 million barrel per day (bpd) cut. However, prices declined as the market examined the announcement with a level of scepticism as to how the cuts would be reached. Each country is set to announce its own voluntary cut, with the aim of reaching the additional 1 million bpd but questions remain on how this will be achieved if countries such as UAE are expected to increase production in 2024.
Markets this morning
Gas markets opened in negative territory with minor losses on all traded contracts thus far. Following on from yesterday’s reassessment following the large sell off gas markets appear to be moving sideways at this early stage. On oil, the January contract has expired, and the February contract is now the new front month contract. Despite the contract being lower than the January closing price, the February contract has increased in value trading at $81.00/bbl, an increase of 14 cents on its closing price, but $1.83/bbl lower than the expired January contract. EUA Dec-23 too has rebounded from its 13-month low yesterday trading at €71.86/tonne.