UK gas contracts have continued their upward trend from Friday

29 January 2024

Gas Market

UK gas prices opened in negative territory on Friday, however as the session progressed momentum shifted, and contracts eventually settled marginally higher. The front month contract February opened at 67.25p, marking a 1.23p discount compared to the previous session. However, a change in sentiment saw the contract end the day at 69.35p, a 0.87p increase. In the late afternoon news surfaced that one of the three liquification trains at the Freeport LNG plant in Texas was reported to be out of operation until 25 February due to an electrical fault. This comes amidst a series of outages at the facility since January, resulting in a 6% decline in LNG exports since the beginning of the year. In the prompt market gas prices also moved higher, the Within day and Day ahead contract closed at 68.05p and 69.05p respectively.  

Power Market

Mixed movement was witnessed in the GB baseload power market during Friday’s session. The front of the curve made marginal gains while later dated contracts shifted lower. Overall contracts across the curve ended the session in negative territory over a five day average. Upward momentum in the UK gas market enabled the baseload front month contract to gain £0.65/MWh and close at £66.50/MWh while the front quarter Q2-24 moved £0.55 higher to settle at £63.25/MWh. For the second consecutive session EUA carbon prices lost value on Friday, however the price movement was fractional, as the EUA Dec-24 contract shed €0.31 to close at €63.10 a tonne. Carbon prices opened higher but failed to hang onto the gains as the session progressed.  

Oil Market

The global oil markets initially opened in negative territory on Friday but swiftly recovered, ending the session $1.12 higher at $83.43 a barrel. The positive momentum throughout the week was linked to strong macroeconomic data from the US, coupled with China’s decision to inject billions into its economy aimed at stabilizing it. China has also urged collaboration with Iran to prevent potential attacks on ships in the Red Sea, otherwise they have warned of a potential impact on their business relationship. Iran plays a crucial role as a major energy supplier to China, and as a result, the Iranian government places a high value on their relationship with China. Brent crude has made strong gains of $4.10 over a five-day average.