Brent fell back off a near 3-month high on Monday

30 January 2024

Gas Market

There was early support for near futures on the NBP on Monday as prices continued to firm on the back of outages at the Freeport LNG facility in Texas. The front month peaked at 72.05p per therm, which was 2.80p above Friday’s close but as the day unfolded prices flip-flopped and February ended the session marginally higher for the day at 69.48p. The Summer-2024 contract also trimmed early gains before settling flat at 70.63p.  On the prompt, the Spot was raised by over 5.00p in early exchanges but eased back to close 1.95p higher at 70.00p, while the Day ahead was marked 0.53p up at 69.58p at the close.  GB gas demand was 248mcm on Monday and supplies regained some comfort in the afternoon with LNG send out rising to 52mcm while draws on storage gas reserves provided around 22mcm to the system. Power Market GB baseload futures settled mixed for a second day as lower carbon prices weighed on the longer curve. Early gains to NBP futures provided support to near months but February settled £0.88/MWh lower at £65.63/MWh.  A little further out, the Summer-2024 contract closed at £63.50/MWh, down £0.50/MWh. Wind generation was well below the weekly average and this along with an increase to the NBP prompt provided support to the day ahead product. Carbon EUAs tested recent low levels as the Spot settled €1.42/tonne lower on Monday to set at a fresh 22-month low at €59.58 per tonne. UKAs also weakened significantly on Monday with contracts for 2024 and 2025 down by an average of 5.6%.

 Oil Market

Brent fell back off a near 3-month high on Monday as demand woes in China resurfaced and quelled support from rising tensions in the Middle East. Risks of the conflict in Gaza widening increased after another tanker was attacked in the Red Sea at the weekend while U.S. troops in Jordan were reported to have been killed by a drone strike from Iran-backed militants. News of the liquidation of the property giant, Evergrande, brought China’s property crisis to the fore again and raised questions on whether the government’s latest stimulus plan can provide a recovery in oil demand. At the close, Brent for March delivery settled $1.15 lower at $82.40 a barrel, West Texas Intermediate closed at $76.76, down $1.23 a barrel.

Markets this morning

The NBP futures market opened softer this morning, but latest trades have seen prices move into positive territory.  The front month is at 70.00p and has traded at or just below this level for almost two weeks, hitting a recent low of 66.75p on the 23-Jan, its lowest level since 17-Sep-21.  Prompt prices are edging lower as the market shrugs off a short gas system this morning. In the wider energy mix, carbon EUAS have recovered some of yesterday’s losses and crude oil prices are flat with Brent last exchanging at $82.33 a barrel.