Gas Market
Following the recent downward momentum on the NBP gas market, prices rebounded slightly on Tuesday. With a number of contracts falling below the 60p per therm level at Monday’s close, buying activity increased on Tuesday. Traders most likely saw an opportunity to take value following the decline to new post-energy crisis lows. The front month, Mar-24, oscillated close to Monday’s close in early trading before gradually climbing across the rest of the session adding 1.36p to close at 59.29p/therm. Similarly, the front season made minor gains across the day closing back above the 60p marker at 60.41p/th. LNG imports into Northwest Europe remains strong, with a delivery into the UK due today and a further 8 scheduled to arrive at UK and Belgian ports by the end of the month.
Power Market
GB baseload power contracts tracked movements on the NBP gas market with the majority of contracts trading higher day on day. The Summer-24 contract tested lows not seen since late 2021 on Monday but the uptick on gas markets saw the contract close marginally higher at £55.75/MWh. UK carbon allowances also increased, with the Dec-24 contract increasing by 2% which helped to support further dated power contracts.
With carbon contracts now seemingly highly correlated to European gas markets, the EUA market rebounded on Tuesday tracking TTF and NBP movements. Adding some support is the lack of a biweekly Polish auction this week, lending some support due to a drop in the supply of carbon credits.
Oil Market
Oil prices dipped lower on Tuesday despite continued unrest in the Middle East following the US again vetoing a draft UN Security Council resolution calling for an immediate humanitarian ceasefire. The US is instead backing calls for a temporary ceasefire linked to the release of hostages. Elsewhere in the region the attacks by the Houthi Militants on shipping lanes in the Red Sea continued with drone and missile strikes hitting at least four vessels since last Friday. However, the overriding driving force causing Brent front month oil to move lower by $1.22 to $82.34 per barrel was concern for waning global demand. China, the world’s largest importer and second largest consumer of oil slashed mortgage interest rates as the government looked to support a waning property market and economy.
Markets this morning
Downward momentum has once again returned to the NBP following yesterday’s brief hiatus. Summer-24, the front season, last traded at 59.30p/th session’s low point at this early stage of trading. Likewise, Mar-24 has also retraced almost all of Tuesday’s gains with the last trade of 58.11p/th the market low this morning. the wider energy complex, the Dec-24 EUA contract has also reverted to its downward trend posting early morning losses of 75 cents per tonne last trading at €53.46/tonne. Oil is also now in decline having reversed early trading gains, last exchanging hands at $82.04/bbl.
21 February 2024
