UK NBP gas contracts ended Friday’s session with a decline, sustaining modest losses over a five-day average. The front of the curve witnessed a reduction in risk premium, as contracts aligned with healthy near-term fundamentals. The Summer-24 contract lost 2.38p to close at 95.70 pence per therm its lowest level since February 2022 while Winter-24 moved 2.49p lower to end the session at 111.88p. European aggregated gas storage levels stood at 91% on Friday, in contrast to 88% at the same period last year. This, coupled with an influx of LNG cargoes and favourable weather conditions, has contributed to the recent downward sentiment in European gas markets.
In line with the UK gas market, GB baseload power contracts closed lower on Friday, with the front of the curve taking the brunt of the downward sentiment. The front month contract Jan-24 shed £1.25/MWh to close at £90.75/MWh while the front season Summer-24 closed at 83.88/MWh, its lowest level since December 2021. Losses were also recorded in the prompt market, with baseload for day ahead delivery closing at £84.45/MWh. On Friday, the EUA carbon market continued to fall lowe, with the EUA Dec-23 contract dipping below the €70 price mark to close at €68.65 a tonne. Losses in the wider energy fuel mix also fed into the Dec-24 contract which closed €1.25 lower at €71.73 a tonne.
Global oil markets closed the week on a positive note last Friday, however the commodity has marked seven consecutive weeks of losses. Friday’s upswing was fueled by the United States’ plan to acquire over 3 million barrels for the Strategic Petroleum Reserve, scheduled for delivery in March. This strategic move demonstrates how the group is capitalizing on lower crude prices. Additional upward pressure came from China, as its government vowed to stimulate domestic demand and accelerate economic recovery efforts. The Brent crude front month closed at $75.84 on Friday, up $75.84 barrels per day, however the contract is down $3.27 over a five day average.
Markets this morning
This morning, the UK gas market has witnessed a clear downward trend, as the front month contract dipped to a low of 90.72p and is currently trading at 92.23p. A similar pattern is evident in the front quarter contract Q1-24, which last traded at 91.60p, reflecting a loss of 6.19 pence from Friday’s settlement. The losses this morning are taking direction from ample gas supplies, while favourable weather fundamentals are also feeding into the downward push. In tandem, global oil markets and EUA carbon prices have both started the day lower. The EUA Dec-24 contract reached a low of €70.21 this morning and is currently trading at €71.20 per tonne.