Tuesdays gains to NBP futures were consolidated yesterday

01 February 2024

Gas Market

Tuesdays gains to NBP futures were consolidated on Wednesday as near month contracts ended the session an average of 1.60p per therm higher.  The GB gas system opened undersupplied yesterday and reports emerged later in the session of an outage at the Kollsnes plant which explained the lower deliveries through the Langeled feed to the UK. Gas flows were only down by 5-10mcm and the issue was expected to be resolved within 24 hours according to Gassco.  By the close of play the GB gas system was in balance and gains to prompt prices were trimmed with the Spot and Day ahead closing just over a penny higher. Reports show up to four LNG tankers are expected at UK ports by next Tuesday while gas demand is forecast to ease next week with temperatures expected to stay above normal while increased wind generation could also curb gas demand.

Power Market

On its last day as front month, the February baseload contract added £1.60/MWh to settle at £69.80/MWh as baseload futures garnered support from rising gas and carbon markets. The March contract closed at £67.00/MWh gaining £1.25/MWh and the Summer-2024 product added £0.70/MWh.  Carbon prices ticked up too with EUA contracts for 2024 and 2025 up by half a percentage point or around 31 cent per tonne. Wind generation was almost 48.0% of GB power supplied yesterday and is expected to fall on Thursday to around 32.0% or 12.5GW. The prompt settled higher as a result and baseload for the Day ahead added £3.69/MWh.

 Oil Market

Crude oil prices slipped back on Wednesday with markets focused on demand woes after the latest data released from China. January’s results for the world’s second largest oil consumer showed manufacturing activity shrinking for the fourth month and dampened the market after Tuesday gains.  The purchasing managers index picked up slightly from December but at 49.2 still causes concern. A PMI below 50 indicates contraction in the economy.  Most of the growth forecasts for 2024 are based around a robust recovery in China and the market has doubts especially after the news earlier in the week that the property Giant Evergrande was ordered into liquidation. It was the last day of trading for the March contract for Brent and it settled $1.16 a barrel lower, however, the more actively traded April contract shed $1.95 a barrel to close at $80.55 a barrel.

Markets this morning

Theres some uncertainty in the gas markets this morning as near curve contracts on the NBP struggle to find direction.  The front months have flip-flopped between gains and losses several times, but latest trades have March at 73.15p which is a decline of 1.15p from yesterdays close. Typically, contracts that have traded are around a penny lower on the latest trades.  On the prompt, the Day ahead product is 1.65p off yesterdays close while the Spot has yet to get going.  Langeled flows are back above 71mcm for today indicating the outage at Kollsnes has been resolved.  Brent for April delivery has gained 58 cents a barrel this morning.