An erratic day on the NBP ended with prices across the curve closing marginally down from Monday’s close. The front month, Feb-24, opened higher and continued upwards to a high of 76.1p/th spurned on by the news of a missile striking an empty Maltese cargo ship in the Red Sea. However, prices were soon in decline once again with reports that three laden LNG tankers operated by Qatar Energy had recommenced their journey to Europe via the Suez Canal and the much-maligned Red Sea route. Despite the recent volatility, the overall market movement has been one of decline for the past 20 days, with Summer-24 reaching a new 24-month low of 73.11p/th.
Following in the path taken by the NBP, GB baseload power ticked lower as bearish fundamentals won out against the bullish geopolitical issues in the Middle East. Gas generation is currently playing a larger role in the GB electricity fuel mix due to the unavailability of half of the nuclear fleet. Gas generation through January has averaged 15.4GW so far, 55% higher than January 2023.
The European carbon market continued its recent decline reaching a new 16-month low. The return of auctions this week, and declining European gas prices have helped to supress carbon prices, with the spot market closing €64.22/tonne.
Oil prices oscillated close to Monday’s close due to varying issues impacting on supply and demand. Early trading was dominated by the risk of supply disruption due to the continued targeting of vessels traversing the Red Sea and the continued tensions in the Middle East. Prices traded over a dollar higher following attacks by Iran on targets in Iraq and Syria. However, comments from the Federal Reserve’s Governor dampened the hype that interest rates in the US would soon be cut lead to a strengthening dollar helped oil prices to fall int he afternoon. However, late news that due to poor weather conditions oil production in the US state of North Dakota had fallen by 650,000 barrels per day gave some late support to prices as the front month contract recovered to $78.29 from an intraday low of $77.60/bbl.
Markets this morning
Despite the cold weather, bearish market fundamentals continue to push NBP prices lower. Recent forecasts estimate that gas storage sites will be 49% full come the end of the winter despite the recent cold snap. This, and the continued supply of LNG and Norwegian gas is helping the front month trend lower, last trading at 71.55p/th, a decline of 1.97p/th from yesterday’s close. Oil too has returned to decline as early reports of disappointing economic data from China has seen the front month shed $1.70 a barrel. The carbon EUA market continues on its downward trend as the Dec-24 contract last traded at €65.35/tonne.