Continued attacks by Ukraine on Russian energy infrastructure fed into the wider energy complex on Monday as all contracts made substantial gains

19 March 2024

Gas Market

The NBP gas market extended Friday’s gains on Monday, as the bellwether summer contract increased for the fourth consecutive session. The contract increased by 2.35p/th on Friday, before adding a further 4.61p/th across Monday’s session. Prices were driven higher following the attacks on Russian energy infrastructure by Ukraine which have impacted oil refining capacity, with fears that gas capacity could also be impacted. Although Europe receives significantly lower levels of gas from Russia than it did prior to its invasion of Ukraine, the block still receives Russian LNG cargos and limited volumes of pipeline gas. Also adding to the upward pressure, particularly on the prompt, has been an increase in Asian Spot LNG prices with the NBP and other European hubs increasing to remain competitive in the LNG marketplace. An outage at the Norwegian Aasta Hansteen plant contributed to the 6.00p/th increase on Day ahead as it closed at 74.50p/th.  

Power Market

The GB baseload power market compounded gains made last week through Monday’s session. Driven by the increase on the NBP gas market the front season increased by £3.08/MWh, closing at £66.33/MWh. Further along the curve some insulation was provided by the UKA carbon price which traded in a tighter range than its European counterpart. However, the prompt market shrugged off the gains on the gas markets with Day ahead prices flat day on day due to strong wind generation. EUA carbon prices increased by over 3% on Monday following a 1.5% increase on Friday. Carbon prices were largely pushed higher by strong European gas prices pushed higher by the attacks on Russian energy infrastructure by Ukraine.  

Oil Market

Crude oil prices made significant gains on Monday having moved broadly sideways through Friday’s session, with Brent front month declining by a modest 8 cents per barrel. However, the market on Monday increased by $1.55/tonne to 4-month high of $86.89/bbl. Prices were spurred on by continued attacks by Ukraine on Russian oil refineries which have caused a reduction in Russia’s refining capacity by 12%. Adding to the upward momentum was news of a production cut in Iraq to compensate for exceeding the OPEC+ quota since the turn of the year, while actual export figures released by Saudi Arabis for January showed a further decline in exports from the oil rich nation.  

Markets this morning

The UK gas market is delicately balanced this morning as supply and demand are evenly matched. Forecast demand for the day is coming in at 165MCMand reflects an overall reduction in LDZ demand as temperatures improve. The gas market has opened relatively quiet and early trading has seen contracts not stray too far from previous settlements. Current bid/offer spreads would suggest that upward price pressure remains. The Brent crude oil front month contract is trading lower by $0.37 and is priced at $86.55. The EUA carbon market is firmer this morning with the front month trading at €59.56 per tonne, up by €1.99.