NBP futures have opened softer this morning reversing yesterdays gains

28 December 2023

Gas Market

The gas markets resumed with strong gains after the break for the Christmas holidays.  Concerns were raised following the increased attacks on shipping vessels in the Red Sea over the break. It was feared this could force shipping traffic to be diverted away from the Suez Canal, the quickest route to Europe from Asia for oil and LNG tankers.  The front months opened up to 7.00p higher with January extending gains and peaking at 93.90p.  Fears eased in the afternoon and the gains were partially reversed, leaving the front months an average of 4.40p higher with January settling at 90.03p.  The summer contract added 3.65p on the day, closing at 88.97p.  There was very little liquidity in the prompt market and the Spot and Day ahead products were assessed at 80.76p & 80.85p respectively when the session came to an end.  

Power Market

There was not much activity in the GB Baseload power market on Wednesday but it was no surprise to see future prices assessed higher at the close of play.  The gains on the NBP curve coupled with firmer carbon prices added to the upside for power futures.  The front month added £5.25/MWh to close at £90.50/MWh while the summer contract was assessed at £82.15/MWh, posting a gain of £2.65/MWh. Baseload for Thursday delivery fell sharply to £32.60/MWh with robust supplies of wind generation expected to continue to the weekend.  Wind contributed over 20.0GW to the GB power stack on Wednesday and is expected to deliver similar on Thursday.  

Oil Market

After gaining almost two dollars a barrel on Tuesday, the February contract for Brent declined by $1.42 yesterday.  Concerns of an escalation of attacks on shipping in the Red Sea eased yesterday with reports of U.S. military activity in the area. It was reported that several shipping companies were considering avoiding the route through the Suez Canal, but this would mean taking the long way around the South of Africa which would delay deliveries and add to costs.  The industry group, American Petroleum Institute, have reported a build of 1.8m barrels in U.S. crude oil stocks last week but official government figures will not be released until Thursday this week.  

Markets this morning

With fears of shipping traffic being diverted away from the Suez Canal easing, NBP futures have opened softer this morning. The front month, January, is 4.28p down at 85.75p on the last trade.  The remaining winter months have also fallen by a similar amount while contracts past March are still dormant.  The GB gas system is forecast a touch short for today while demand for gas fired generators is subdued by strong wind generation.  The prompt has shrugged off the short system with the Day ahead down by almost a penny.  Crude oil prices have continued to slip with Brent last exchanging at $79.07 a barrel.