Brent bounced back on Thursday adding $1.26 a barrel

16 February 2024

Gas Market

NBP futures opened a little higher on Thursday and despite rising further during the session gains to the near curve were minor at the close.  Near months peaked just shy of 2.00p above Wednesday’s close before slipping back after some earlier buying activity prompted by reports that the EU does not see a requirement to extend the agreement to transport Russian gas via Ukraine. The statement came from the EU Energy commissioner yesterday and the transit agreement is up at the end of the year. March settled at 61.10p, which was almost flat while Summer added 0.22p to close at 62.41p.  Prompt prices eased for the most part, but losses were modest. GB gas demand is down due to the mild temperatures while wind generation is just below seasonal norms.  The Spot ended the day 0.85p lower at 59.55p yesterday and with prompt prices falling below 60.00p this could bring competition from Asia for LNG supplies.

Power Market

The GB baseload curve settled mixed with sharp gains to carbon holding up longer contracts yesterday. The front month, March added just £0.25/MWh on Thursday while the Summer-2024 contract rose by the same amount to close at £58.00/MWh.  Wind generation was close to 9.0GW yesterday and is forecast to remain just below the seasonal norm for the next few days before picking up next week. Baseload for the Day ahead settled slightly lower at £62.46/MWh. Carbon prices picked up yesterday ending a six-day losing streak for the EUA Spot. Concerns that Germany will cancel surplus coal exit related EUAs prompted some buying activity which drove EUA prices higher by an average of 2.6% yesterday.  

Oil Market

Brent bounced back on Thursday adding $1.26 to a barrel of crude oil after the U.S. greenback weakened on the back of falling retail sales.  Retails sales in America fell back by 0.8% in January.  These results brought the interest rate cuts back into focus, it is believed that the U.S. Fed will begin lowering interest rates in March.  The latest report from the International Energy Agency, based in Paris, states that momentum is waning for global oil demand, and pared back its global growth forecast for 2024 to 1.22m barrels per day from 1.24m barrels per day. This may have curbed gains to crude oil prices on the day as the April contract for Brent settled at $82.86 a barrel.

Markets this morning

Natural gas futures on the NBP have switched direction this morning after opening a touch firmer.  Latest trades for the front months have seen contracts move into negative territory with March and April around 0.20p per therm below yesterday’s close or 1.30p down from the morning high. Prompt prices are still to get going but the GB gas system is well supplied as demand has fallen to 207mcm and LGN suppliers are set to cover 28% of demand today. Carbon EUAs are trending lower this morning with contracts for 2024 and 2025 around 80 cent per tonne down.  Likewise, in the crude oil markets, Brent for April is 82 cents a barrel lower at $82.04.