A choppy day on the NBP saw all contracts move sideways with near curve contracts making minor gains.

07 February 2024

Gas Market

A choppy day on the NBP saw all contracts move sideways with near curve contracts making minor gains while far curve prices posted minimal losses. The front month contract, March-24, added just over a quarter of a penny to close at 69.59p/th. The Nyhamna processing plant in Norway remained offline throughout Tuesday’s session, following storm damage to power supplies over the weekend. Showing how far this market has progressed, news of extended maintenance at the plant on the 13th of June 2023 saw the front month step higher by 16.09p/th and the front winter increase by 9.80p/th. In stark contrast Winter-24 today closed marginally lower at 85.75p/th despite the continued outage.    

Power Market

GB baseload curve prices declined on Tuesday taking their lead from the declining UKA Dec-24 carbon contract that fell by 7.2%. On the prompt market prices increased by over 32.60% likely driven by a fall in wind generation and the continued outage on the new Viking Link between Denmark and the UK that can import cheaper renewable power from the Nordic country. The European Commission recommended that the EU reduce carbon emissions by 90% by 2040 when compared to 1990 levels. In order to achieve the target, the power generation sector will likely need to transition away from fossil fuels including natural gas and move towards low-carbon and renewable sources for power generation.    

Oil Market

Crude oil prices moved higher on Tuesday despite an anticipated increase in US stockpiles. The US’ accumulation of oil is recovering following the decimation in January due to the extreme temperatures that impacted US production. Although, in supportive news for prices, the country’s Energy Department did note that oil production in 2024 would be lower than previously anticipated. Also supporting oil prices is the continued tensions in the Middle East although there is some hope of a de-escalation and a ceasefire in Gaza. US Secretary of State Blinken is currently in the midst of a diplomatic efforts to reach a truce in the area, meeting the leaders of Saudi Arabia and Egypt. Brent front month closed the day higher by 1% at $78.59/bbl    

Markets this morning

Norwegian flows are nominated to increase this morning although issues still persist at Troll and Nyhamna. The issue at Troll has almost been rectified, with only 5mcm of capacity offline there, while the Nyhamna issue continues to impact 46mcm/day of gas production. Although the issues are persisting, the available capacity is increasing day on day which is being reflected in prices declining in early trading. Oil is continuing to strengthen following the late publishing of data in the US showing a slower than expected build in crude stocks.