Cold weather helped to push gas prices higher on Friday following the losses on Thursday

04 March 2024

Gas Market

Gas prices stepped higher as a result of colder weather that brought snow to parts of Ireland on Friday morning. Within day and Day ahead contracts gained almost 4p per therm across the session, closing at 3-week highs with both being assessed at 67.00p/th. April, in its second session as the front month, gained 2.70 pence erasing the losses witnessed on Thursday, as it closed at 64.28p/th. Winter-24 followed a similar path closing at 78.90p/th, also a new three week high.  Despite the strong fundamentals, the market needs little reminding of the precarious nature of the supply and demand mix, and any unexpected increase in demand causes repercussions along the gas curve.  

Power Market

Tracking the upward momentum on the NBP gas market GB baseload power contracts stepped higher on Friday. The front season Summer-24 added £1.93 to close at 361.15/MWh, while the winter contract was assessed £1.85 higher at £73.55/MWh. On the prompt the colder weather increased demand helping the contract to increase by £5.50, marked at £68.75/MWh at the close. Maintenance on the UK’s nuclear is also continuing which is helping to support prices. Spot carbon prices increased marginally on Friday, while marginal losses were witnessed on the Dec-24 and Dec-25 contract. Having tested new lows, carbon prices recovered last week with the contracts taking direction from the European benchmark gas hub the TTF.  

Oil Market

May, the new Brent front crude oil contract, rose by $1.64 a barrel as the entirety of the energy complex rose on Friday. Assessed at $83.55/bbl, having traded as high as $84.34, the May contract increased as traders and analysts awaited an expected extension of the OPEC+ voluntary production cuts. Analysts were expecting a resolute announcement that could extend the cuts until the end of 2024. On the demand side, concerns remain for China the world’s largest importer and second largest consumer of oil. For the fifth consecutive month manufacturing activity shrank increasing the pressure on Beijing to roll out further stimuli for their waning economy. However, the latest inflation data from the US and EU is continuing to show recovering economies and the hopes of an increase in demand for oil.

Markets this morning

With the latest bout of cold weather behind us, NBP contracts are already at this early stage unwinding much of Friday’s gains. The front season, Summer-24, has shed 1.91p in thin trading. On the prompt markets, within day has traded lower at 64.95 pence per therm, as demand has decreased pressured by warmer temperatures, higher wind speeds and the return of nuclear reactors on the UK power grid. The Dec-24 carbon contract is once again in decline with almost 4% wiped from the contract since Friday’s close. Oil is trading close to Friday’s close with prices supported by the announcement from OPEC+ that the group is extending its voluntary production cuts.