European storage currently stands at 59% full, with only 4 days left of the traditional gas heating season.

27 March 2024

Gas Market

European gas markets all declined significantly with the NBP April contract falling back below 70.0p/th in its penultimate session of trading on ICE before expiry. The contract declined by 4.27p/th as market fundamentals once again reigned over market proceedings on Tuesday. Similarly, both Q2-24 and Summer-24 also due to expire at the end of trading Wednesday, suffered significant losses as the contracts lost 3.52p/th on average and both were assessed below 70.00 pence. Prompt markets also declined following a reforecast of wind generation pushing the renewable power source 20% above seasonal norms and reducing gas for power demand. Day ahead gas fell by 4.10p/th to 68.70 pence influenced by a markedly oversupplied system as demand was unseasonably low.  

Power Market

GB baseload power took direction from a declining NBP and weak UK carbon allowances market as prices took a step lower on Tuesday. Day ahead power also declined buoyed by the improved wind generation on the system. Wind generation on the UK grid through the month of March averaged 10.8GW, 24% higher than the average for the same period from 2019 through to 2023 highlighting the investment that has taken place in the UK over the last 5 years. The EUA carbon market declined in value on Tuesday as European gas markets continue to be a key driver and improved wind generation across Central Europe also a bearish factor. The long Easter weekend is resulting in less EUA auctions over the next two weeks which is limiting losses.  

Oil Market

Oil prices steadied and retraced some of Monday’s gains as the market took a more balanced view of the loss of Russian refinery capacity. The attacks by Ukraine over the weekend increased shuttered capacity to 14% according to calculations by Reuters news agency.  The US has urged Ukraine to cease attacks on Russian oil refining capacity as the front month contract is currently 5% higher than prices on the 12th of March when Ukraine first targeted Russia’s energy infrastructure. Brent front month closed on Tuesday at $86.25 a barrel, while WTI increased by 33 cents to $81.62/bbl. The market saw a late decline following the news emanating form the American Petroleum Institute that US crude stockpiles had increased over the previous week.  

Markets this morning

The UK system is once again forecast long, following yesterday’s oversupply driven by increased wind generation and reduced heating demand. Any Contracts that have traded so far this morning have opened in line with yesterday evening’s close. Summer-24 in its final session on ICE is marginally higher, but still below the 70.00p/th level, last trading at 69.16p/th. Brent crude oil is also weaker following a surge in US inventories with the front month contract down 77 cents at the time of writing.