Crude oil prices have rebounded

02 January 2024

Gas Market

Near months on the NBP ended the year in decline with February settling at 80.71p, a fresh two year low for the contract.  The mild winter along with high levels of gas in storage while LNG deliveries keep arriving have pressured natural gas futures lately as near month contracts have fallen to levels not seen since November 2021.  February fell by 3.94p on Friday which was almost the same decline for the week.  The Summer 2024 contract eased by 3.08p to end the year at 81.00p, which is 117.83p down from where the contract was a year ago. Prompt prices picked up a touch on the day with forecasts for temperatures to return closer to normal levels for the start of January.

Power Market

Slight gains to carbon prices on Friday curbed losses to GB baseload futures.  Lower gas prices weighed on the power curve on the day but losses were marginal with the January contract closing at £86.55/MWh, just £0.33/MWh down on its final day as front month.  The Summer-2024 contract settled £0.57/MWh lower at £79.03/MWh. Carbon EUAs settled around a half a percent higher with the Dec-24 contract settling at €80.65 per tonne. Wind generation is to fall going into January with forecasts for Tuesday around 13.0GW.  Baseload for the day ahead increased on the back of this and increases on the NBP prompt on Friday and settled at £82.03/MWh.

 Oil Market

Crude oil prices eased marginally on Friday bringing the decline for the week to $2.12 a barrel for the global benchmark.  Brent for March delivery settled at $77.04 a barrel on Friday posting a loss of 11 cents a barrel. The markets remain gloomy about demand growth for 2024 and while the geopolitical unrest in the Middle East is still a concern the front month for Brent was down almost $9.00 from the end of last year.  OPEC+ have pledged to reduce production output but there some questions as to whether the group can adhere to commitments after reports that the group’s market share is shrinking.

Markets this morning

The GB gas system has opened long by 20mcm against today’s forecast demand of 219mcm and prompt prices have softened in early exchanges.  The Spot has yielded 8.70p while the Day ahead product is almost 6.00p down.  NBP futures have traded in a tight range so far with near months less than a penny below Friday’s closing prices.  The Summer 2024 contract is 0.85p lower at 80.15p and contracts past this have yet to get going in the new year.  Crude oil prices have rebounded after more attacks on shipping in the Red Sea over the weekend which saw the U.S. deploy helicopters to fend off Houthi militants and Brent last traded $1.91 higher at $78.95 a barrel.