Yesterday, UK gas prices opened flat but later showed a clear downward trend, leading to premium falling from the front of the curve, with March-24 closed at 71.25p down 3.05p on the day. With prices in January trading at their lowest levels since early 2022, the opening session of February aligned with this downward momentum, however the market fell short in releasing all risk premium gained in the previous two session. The front seasonal contract Summer-24 peaked at 75.09p before falling back to close at 72.93p while Winter-24 closed at 88.87p, down 1.43p on the day. Currently, market fundamentals seem robust, as aggregated European storage stands at 70% capacity while six LNG cargoes are projected to arrive in the UK in the upcoming week. In the prompt market prices also fell, the Within day and Day ahead contracts closed at 70.05p and 69.40p respectively.
Losses in the wider fuel complex supported downward pressure along the GB baseload power near curve yesterday, while price movement was limited further out. The front month contract March edged £0.85/MWh lower to close at £66.15/MWh while the front seasonal contract Summer-24 settled £0.65/MWh lower at £66.50/MWh. Strong wind generation supported losses in the prompt market, as the Day ahead contract lost £4.93/MWh to close at £62.00/MWh. EUA carbon contracts slumped yesterday following two days of gains, with the Dec-24 contract shedding €2.05 a tonne to close at €62.32. European carbon prices have been tracking the recent weakness in the gas markets.
Upward momentum returned to the global oil markets during the opening hours of yesterday session, influenced by developments in an OPEC committee meeting and the Federal Reserve. OPEC maintained its production cut targets, signalling stability, while the Fed, indicating interest rates have peaked and made no adjustments. However, the market shifted into a downward spiral when reports surfaced of a ceasefire between Israel and Hamas coupled with an outage at a major US refinery. As a result, Brent crude front month closed $1.85 lower at $78.70 a barrel while the WTI equivalent shed $2.03 to end the session at $73.82 a barrel.
Markets this morning
The UK gas market has witnessed limited trading activity this morning ahead of the Irish Bank Holiday weekend. Gas for delivery in March last traded at 70.80p, down 0.45p from yesterday while Summer-24 is also trading lower at 72.38 pence per therm. The prevailing oversupply in the UK gas system, exceeding 20MCM this morning, is reflected in the continued weakness seen in the NBP prompt market, where contracts are on a downward trend. In contrast, global oil markets have displayed an upward trajectory this morning, with the Brent crude front month last trading at $79.15 a barrel.