Brent settled higher for a second day but gains were tempered by hopes of a possible ceasefire in Gaza

28 February 2024

Gas Market

Natural gas futures opened lower on Tuesday and near futures reversed most of the gains witnessed on Monday, however, the market switched tack in the afternoon session and near contracts settled around a penny higher.  The intra-day swing for March was 4.55p as the front month settled 1.30p higher at 60.60p on its penultimate day as lead month for the NBP.  The contract is due to expire on Wednesday on the ICE platform and the low of the day of 56.95p prompted more short positions to be filled. The Summer-2024 contract added 1.26p day on the day to settle at 61.05p after falling to a low of 58.57p earlier. There was some volatility on the prompt too, as early losses were reversed and the Spot and Day ahead products moved into positive territory as LNG send out fell to 26mcm and storage reserves were called on to balance the system.  

Power Market

It ended up with a third session of gains for the near baseload power curve on Tuesday after contracts opened lower.  The front months reacted to the afternoon rally in NBP futures and the longer curve was buoyed by gains to carbon.  March settled £0.30/MWh higher while the Summer-2024 contract added 1.70/MWh to close at £58.50/MWh.  Baseload for the day ahead eased fractionally yesterday with wind generation forecast around the seasonal norm for the week. The increased buying activity in the carbon markets resumed yesterday afternoon and EUA contracts recorded a second day of strong gains as traders looked to close out short positions. Contracts out to 2026 rose by 3.9% and the Spot settled at €54.31 per tonne.

Oil Market

Hopes of a ceasefire in Gaza damped gains to crude oil prices yesterday as the global benchmark added $1.12 a barrel.  The U.S. President, Mr Biden, appeared confident that a truce deal could be worked out by next Monday, stating the current talks are close to an agreement in a press address yesterday. There are doubts to Israel’s commitment and some mediators have expressed caution about the progress. OPEC+ are to consider extending the current production cuts into the second quarter. It’s believed the group would be happy with prices around the $85 a barrel mark but if a ceasefire is agreed prices could tumble back into the mid to high $70 a barrel range as premium for the Middle East conflict is released.  The group agreed to restrict production by 2.2m barrels per day last November.

Markets this morning

At 10:00am the key natural gas contracts for the NBP were trading at 62.00p per therm.  The latest trades for the Day ahead, the front month and the Summer-2024 were all agreed at 62.00p which is an increase for each contract. Trading activity is leaning towards the March contract as this expires today and April will assume front month status tomorrow, but all futures are edging higher. Gas demand is slightly down today due to an increase in wind generation, but the gas system is forecast short for the third day this week. The rebound to Carbon prices has continued and the EUA contract for 2024 is 80 cent up at €56.50 per tonne while in the crude oil markets, Brent is 78 cents a barrel down.