NBP futures backed up Friday’s losses as near months fell by an average of 3.28p yesterday

Gas Market 

With tensions appearing to ease in the Middle East energy prices across Europe continued to shed premium on Monday.  NBP futures backed up Friday’s losses with more of the same yesterday.  Near months fell by an average of 3.28p per therm over the session but are still around 16.50p above the lows seen near the end of February.  The GB gas system ran with a surplus throughout the day despite gas demand being ramped up from 217mcm to 228mcm to compensate for lower wind generation in the power stack. The system’s comfort pressured the Spot which posted a loss of 5.00p while the Day ahead closed 3.55p lower.  In the U.S., nominations at Freeport LNG had fallen close to zero last week but picked up at the weekend and the arrival of a tanker raised hopes the plant could be close to ramping up production after a month of maintenance works.

Power Market

GB baseload futures fell for a second day on Monday as the weak gas market continued to provide direction.  Lower carbon EUAs also fed into mix as the May contract settled at £61.65/MWh with a loss of £3.10/MWh. Further along the curve the declines diminished and the Winter-2024 eased by £2.00/MWh to close at £81.00/MWh.  Forecasts for Wind generation remain down on recent averages but the Day ahead settled $4.02/MWh lower on Monday.  Carbon EUAs have fluctuated with gas prices recently and contracts for 2024 and 2025 fell by 2.9% yesterday. However, UKAs settled higher with compliance demand boosting prices by £0.59 per tonne.   

Oil Market

The price of crude oil eased on Monday as the threat of an escalation in the war in the Middle East abated.  Brent traded down to $85.79 a barrel before eventually settling at $87.00 a barrel with a loss of 29 cents. With geopolitical risk appearing to fade the market turned to the fundamentals and the U.S. is due to publish Q1 GDP results on Thursday. A slowing in growth is anticipated but the Fed has already dampened expectations of a cut to interest rates in the near term and this has supported the dollar.  Demand in the U.S. shows no signs of picking up with crude oil reserves in the world’s largest oil consumer climbing for the last three weeks.  

Markets this morning

NBP futures are oscillating between losses and gains this morning with the front month a half a penny higher on the last trade. Further along the curve, the front season is just 0.10p above yesterdays settlement and contracts past this have yet to get going. Prompt prices are a touch higher despite a comfortable gas system this morning.  Demand is pitched at 208mcm for today and supplies are forecast 16mcm long. Brent has recovered yesterday’s losses and last traded at $87.43 a barrel on the back of positive data from the eurozone.