Near futures have opened lower with March at 58.95p

22 February 2024

Gas Market

Having opened a touch lower on Wednesday, NBP futures drifted higher with some near contracts edging into positive territory before easing back again ahead of the market close.  Movement on the day was kept within a narrow range as fundamentals remained weak and the front month traded between 59.66p and 58.11p before going on to close at 59.12p, posting a loss of 0.17p.  Prompt prices ended the session a little higher, buoyed by forecasts for temperatures to return to seasonal norms going into the weekend while a drop in wind generation is also expected to add to demand over the coming days. The muted gas demand this week has allowed UK storage facilities to reinject to boost reserves which now stand at 77% of capacity. At the close, the Day ahead product was 1.60p higher.

Power Market

Mixed movement in the gas market limited gains to the baseload power curve yesterday.  The front month, March, settled £0.35/MWh up at £55.85/MWh while the Summer-2024 contract moved just £0.05/MWh higher over the day. Forecasts for lower wind generation provided support to the prompt and baseload for the Day ahead settled at £55.23/MWh, up £1.89/MWh from the previous settlement. Carbon prices were mixed on Wednesday with UKAs easing slightly while EUAs settled a touch higher having opened softer. The Spot for EUAs added 25 cent per tonne to close at €52.70 while the Dec-2025 contract settled at €56.67 up €0.49 per tonne.

Oil Market

Crude oil prices flip-flopped on Wednesday with markets awaiting the release of the minutes of U.S. Federal Reserve meeting held in January. The markets edged higher just before the close with Brent settling 69 cents a barrel up at $83.03. The Fed is still cautious with regard to lowering interest rates, and it is believed they may hold back the commencement of the rate cuts until June. Russia has reaffirmed its pledge to reduce production output by 500,000 barrels per day with a government representative saying they will meet their target for February. Meanwhile the latest oil data from the EIA is expected to show a recovery in U.S. production after refineries were offline during the earlier cold snaps and maintenance periods. This week’s report was delayed due to the public holiday on Monday and is now due on Thursday afternoon.

Markets this morning

GB gas demand has increased by around 20mcm today due to the cooler temperatures and lower wind generation.  Demand remains well below the seasonal norm and the gas system is well supplied with the National grid showing a modest surplus.  Prompt prices are slightly up however with the Day ahead almost a penny higher at 59.50p. Trading for the NBP futures has been sluggish but near futures have opened lower with March at 58.95p and the Summer-2024 at 59.50p. Carbon EUAs have shed around €1.00 per tonne and in the crude oil markets, the April contract for Brent has increased by 34 cents a barrel.