Near NBP futures have continued to fall this morning.

21 March 2024

Gas Market

There was mixed news from Freeport LNG yesterday as the company announced the stricken train 3 had returned to production after an extended maintenance period.  The liquefaction train had been offline since late in January when hit by a cold snap and the company had struggled to repair the unit since. As a precautionary measure checks and maintenance works will be carried out on train 1 and train 2 which could take until May to complete. They also committed to an increase in production by 10%, bringing the annual output to 16.5 million metric tons per annum once the checks are completed.  The news pressured the curve late in the session and summer months shed an average of 2.60p. Prompt prices also lost premium yesterday with the Spot and Day ahead products falling by 2.39p and 3.80p lower respectively.  

Power Market

Baseload power futures continued to release premium on Wednesday as a late decline in NBP futures weighed.  The front month shed £2.00/MWh to settle at £64.00/MWh while the Summer-2024 contract closed at £64.25/MWh, down £1.70/MWh.  Carbon prices flipped flopped through the morning session but found direction when the NBP curve started to ease.  EUA contracts for 2024 and 2025 yielded over 2.0% on the day while the Spot settled at €58.78 per tonne. Wind generation is forecast to almost double Wednesday’s output on Thursday and could exceed 10.0GW. The Day ahead contract reversed off the high of the month to settle £6.86/MWh lower at £68.20/MWh, which is just £3.29/MWh above the average for the month. 

Oil Market

After gaining over two dollars a barrel over the previous two sessions, the global benchmark was once again in reverse mode yesterday.  The May contract for Brent slipped by $1.43 to close at $85.95 a barrel after the U.S. Fed left interest rates unchanged. It was expected that Mr Powell, the Fed’s Chair, would leave rates as they are but he indicated that there could be three rate cuts this year if the U.S. economy continued to close in on the target for inflation of 2.0%. A stronger dollar also weighed on crude oil prices yesterday while the Energy Information Administration reported a larger than expected draw on crude oil stocks as exports and refinery activity increased over the week.

Markets this morning

Yesterday’s late run down in prices has continued into this morning’s session and near futures on the NBP are down by around a penny. The front month traded to a low of 69.00p but has last traded at 70.19p.  The prompt screen is also showing losses as the Spot and Day ahead traded below 69.00p on their last exchange. Demand on the GB gas system is forecast at 215mcm for today and supplies are 27mcm long with Norwegian imports nominated above 90mcm. In the crude oil markets, Brent is down 18 cents to $85.77 a barrel.