NBP Summer-24 contract breaks the 60.00p price barrier to close at 59.35p

20 February 2024

Gas Market

UK gas prices retreated once again on Monday, returning to pre-energy crises levels. The Summer-24 contract broke the 60.00p price barrier to settle at 59.35p while the front month contract March broke the same price barrier to close at 57.93 pence per therm. The market’s prolonged downward momentum during the winter season is uncommon, however Europe is experiencing a mild winter which is reducing the need to draw gas from underground storage while LNG supplies remain abundant.  While the market’s resilience is welcomed, it’s crucial to bear in mind its exposure to volatility. In the prompt market contracts also released risk premium as the UK gas system was oversupplied throughout the day, the Within Day and Day ahead contracts closed at 56.10p and 55.90p respectively.  

Power Market

For the second consecutive session GB baseload power prices took a step backwards on Monday. Risk premium fell from the front of the curve with the front month contract March-24 shedding £2.50/MWh to close at £54.63/MWh while the front seasonal contract Summer-24 dipped £2.18/MWh lower to close at £55.18/MWh. Baseload for day ahead delivery also lost value yesterday, closing at £56.75/MWh, a £4.73/MWh discount to the previous session. Major losses were recorded in the European carbon market on Monday, as prices fell to their lowest levels in 30 months on the back of a major selloff. The EUA Spot contract took another step closing to the €50.00 price barrier, closing at €51.25 a tonne while the EUA Dec-24 contract lost €3.97 to close at €53.14.

Oil Market

Global oil markets experienced mixed movement on Monday, shifting between positive and negative territory due to a tug-of-war between demand worries and geopolitical tensions. Yemen’s president issued a warning, suggesting that even if the conflict in Gaza subsides, Houthi militants could continue to pose threats to international navigation routes. This concern was underscored by the abandonment of an English-registered cargo vessel off Yemen early on Monday morning, following a missile strike. The Brent crude front month initially dropped to $82.55 a barrel before partly recovering losses to settle at $83.56 a barrel. Despite heightened geopolitical tensions, concerns about demand restricted some of the premium typically associated with war.  

Yesterday in summary 

On Monday, the UK gas market reached new lows as the NBP Summer-24 contract breached the 60.0p price barrier, settling at 59.35p, its lowest level since October 2021. Gas for delivery in March also broke the same price barrier, closing at 57.93p a 2.63p decline session on session. The weakness witnessed in the market is welcomed as it aligns with the fundamental outlook, including gas storage levels above the five-year average and plentiful LNG supplies. Yesterday, the European carbon market saw historical losses, with prices hitting their lowest point in over two years. Aggressive selling activity drove the EUA Dec-24 contract to close at €53.14, marking a €3.97 discount to the previous session.

This morning

This morning, the UK gas market is showing mixed sentiment, with contracts initially opening lower before shifting into positive territory. The front month contract March last traded at 58.50p, while the Summer-24 contract has surpassed the 60.00p price mark, trading at 60.20 pence per therm. UK gas demand remains weak and in line with yesterday, at 229MCM, this has enabled 21MCM of gas injection to storage. In the wider energy fuel mix, the European carbon market has opened higher, rebounding from yesterday’s major losses. The EUA Dec-24 contract was last traded at €53.85 a tonne, up €0.29 from yesterday.