The Summer 2024 NBP contract closed under the 100.00p mark for the first time since mid-March 2022

05 December 2023

Gas Market

With the first real test of the winter passing, gas supplies across Europe and the UK remain healthy and the markets reacted with a selloff on Monday. Temperatures are set to return to normal this week, but wind generation is forecast to rise which will relieve pressure for gas fired generation.  NBP futures for the winter months fell by an average of 8.75p yesterday with the front month settling at 100.76p. The Summer-24 contract declined by 7.57p to settle under the 100.00p mark for the first time since mid-March 2022, a few weeks following the Russian invasion of Ukraine.  Prompt prices also relinquished premium as the Spot and Day ahead products closed at 97.05p and 96.50p respectively. GB gas demand was 314mcm on Monday and supplies were forecast with a modest surplus throughout the session.

Power Market

The weakness in NBP gas futures and the carbon markets weighed on the GB baseload curve yesterday.  The front month settled £7.75/MWh lower at £93.75/MWh but the losses were not limited to the near curve as the Summer 2024 contract shed £5.13/MWh to close at £88.00/MWh. Carbon EUAs declined by around 2.8% as the Dec-24 contract settled at €73.50 per tonne, down €2.15 per tonne. Forecasts for an increase in wind generation pressured the prompt and the Day ahead product settled £4.00/MWh lower at £103.00/MWh.  The National Grid has wind generation getting close to 10.GW or almost 25% of GB demand today.

Oil Market

After ending the week with two consecutive declines, crude oil prices continued to soften on Monday as the market remains sceptical that OPEC+ can adhere to the promised production cuts.  The group agreed voluntary cuts of 2.2m barrels per day from January at a meeting last Thursday and there are questions as to whether all the group are behind this strategy.  Even if OPEC+ are able to reduce production by the 2.2mbpd, there are some doubts that these will be enough to support prices if demand continues to slow.  Global manufacturing results were weak in November while the wait for a recovery in China’s economy goes on.  The February contract for Brent settled 85 cents down at $78.03 a barrel.

Markets this morning

NBP futures remain weak this morning as early trades for near months are below yesterdays close.  The front month, January, traded down to 97.69p but has recovered a little with the last trade going through at 99.78p.  Further out, the Summer 2024 contract is 1.81p down at 97.50p with contracts past this still to get going for the day. The prompt has opened a touch higher this morning despite a comfortable gas system.  Carbon EUAS have continued to soften while crude oil prices have ticked up by around 60 cents a barrel.
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