Asian spot LNG prices increased forcing the NBP wholesale market to follow suit in order to remain attractive on the global LNG market

25 March 2024

Gas Market

Forward gas markets rebounded on Fridays following the previous sessions losses. With volatility now a seemingly ever-present, the front month NBP contract reversed all and more of Thursdays losses as the contract closed at 71.74p/th, just shy of April’s daily high of 72.22p/th traded just prior to closing. Trades following the closing window saw prices slide by just over a penny. The bellwether seasonal contract, Summer-24, expires this Wednesday ahead of the Easter Weekend. In one of its final sessions, it added 3.31p/th closing back above the 70p/th mark at 70.14p/th. Strong spot LNG prices in Asia were a key contributor to the rising market on Friday as all Europeans struggled to remain competitive and ensure LNG cargos continue to berth at European ports ahead of the injection season.  

Power Market

Reversing the recent downward momentum near curve GB baseload prices tracked the bullish turn on the gas wholesale market. With only 3 LNG cargos due to berth in the near term, 50% of 5-year average levels, concerns are beginning to mount for the price of the UK NBP and European hubs and their ability to attract LNG cargos away from Asia. Baseload contracts on the far curve took direction from price increases on carbon and coal markets, with Winter-24 closing at £77.25/MWh. Carbon prices increased on Friday as an announcement was made that Investment Funds had reduced their short positions in carbon shoring up the market through increased buying activity. Also supporting prices was a strong gas market, but an increase in coal helped to limit the gains.  

Oil Market

Friday saw both Brent and WTI front contracts move lower following US Secretary of State Blinken’s comments on Thursday that a ceasefire was likely imminent between Israel and Hamas. Brent fell by 35 cents to $85.43/bbl while the WTI contract for delivery in May shed 44 cents and closed the week at $80.63/bbl. Traders were hopeful that a ceasefire may encourage the Houthis militants to cease their attacks on the Red Sea shipping routes and allow for the easier shipping of crude globally. Tempering the decline in oil pricing is the continued conflict in Ukraine, with the Ukraine recently attacking Russian energy infrastructure. Further supporting prices is the high interest rates in the US that the Federal Reserve retained at its regular meeting on Wednesday.  

Markets this morning

Gas demand is forecast at 215 mcm for today, the system currently forecast to be 15mcm oversupplied. Following the cold weather over the weekend temperatures are forecast to return to seasonal norm levels while wind generation is also expected at levels normal for this time of year. Despite the relatively well supplied system prices are trading higher with April approaching expiry currently 2.34p/th higher than Friday’s close. Prompt markets are slow to trade thus far, with solitary trade for Day ahead being executed thus far. Oil markets are stronger this morning following further geopolitical unrest triggered by the terrorist attack in Moscow.