Buying activity due to Feb-24 breaking a key resistance price level of 70.00p/th helped stem the recent decline in prices.

19 January 2024

Gas Market

Following the recent sell-off on the NBP, Thursday proved to be a day of reflection as the decline halted, and the most contracts made minor gains, effectively moving sideways. With February closing below 70.00p/th on Wednesday, the move lower appeared to trigger buying action. The contract was supported, trading for the majority of the day at a premium before eventually closing at 68.42p/th. The summer-24 contract, assessed at 68.72p/th, was similarly rangebound, trading between 68.11p/th and 70.49p/th. On prompt markets the day-ahead contract moved sideways, closing almost flat day on day. The contract was directionless due the rising front month and a short UK system, but was weighed down by expected reduction in demand in the UK due to increasing temperatures and wind generation.  

Power Market

GB baseload power curve followed the NBP Market and made minor gains while rising UKA carbon increases also had an impact on winter-24 and beyond. The day ahead contract shed value with wind generation expected to increase, while strong French nuclear generation also helped to stabilise the UK market. Limiting the downside has been the unavailability of 6 of the UK’s own nuclear fleet increasing the gas fired generation on the system. In Irish news, Ireland is likely to miss its 2030 renewable goals. Latest forecasts show that renewable generation is likely to account for 76.4% of total power supplied, short of the 80% target. Contributing to Ireland’s underperformance solar energy is expected to fall short of its targets by 47%.  

Oil Market

Oil prices were supported on Thursday with the Brent front month contract increasing by $1.22 closing at $79.10 a barrel. The reduction in production continued in North Dakota, the top oil-producing US state, due to the extreme cold temperatures. Also adding to the bullish tone were the refreshed global oil demand projections from the IEA and OPEC. OPEC’s projection for 2024 were in line with its previous projections while the IEA increased their projections by a further 180,000 barrels per day. The tensions in the Middle East are still exerting influence over prices, with Pakistan conducting strikes in Iranian territory but the risk of attacks on tankers in Red Sea is declining and influencing oil markets to a lesser extent.