Brent for July delivery declined by $2.89 a barrel on the day but was down $4.42 a barrel from where the June contract settled on Tuesday

02 May 2024

Gas Market

  Subdued gas demand pressured the prompt on Wednesday which in turn fed into near months on the NBP curve.  GB gas demand was below 145mcm, and supplies ran with a surplus to the end of trading as planned maintenance works continued at several Norwegian plants. With temperatures expected to remain above the norm in the UK and wind generation forecast to rise from the low levels witnessed on Wednesday the outlook turned bearish as Tuesdays gains were partially reversed.  On the prompt, the Spot shed 2.75p per therm to settle at 69.50p while the Day ahead product closed at 69.43p, down 3.33p. On the curve, the new front month, June declined by 1.72p while further along the curve the winter eased by 0.81p.

Power Market

Near months eased on Tuesday as the NBP curve fell yesterday while mixed carbon limited losses.  The June contract was elevated to front month status for the GB baseload curve yesterday and settled £0.75/MWh down on its first day as lead month. Further out the winter contract eased by £0.42/MWh, while longer contracts settled mixed on the day. Forecasts for wind generation to remain below recent averages but should be higher than levels seen on Wednesday. Carbon prices were mixed yesterday with the May Day holiday in many European countries limiting trading for EUAs.  The Dec-2024 contract settled at €67.91 having declined by €1.29 per tonne while UKAs for Dec-24 gained £1.11 per tonne.     

Oil Market

 The front month contract for Brent fell to it’s lowest level since 12-March-24 yesterday as hopes for peace deal in the Middle East rise while the Energy Information Administration reported a large build in U.S. crude oil reserves. The July contract for the global benchmark declined by $2.89 a barrel on the day but was down $4.42 a barrel from where the June contract settled on Tuesday.  Representatives from the U.S. and Egypt have continued to push Israel and Hamas to accept the proposal for a ceasefire and hopes that an end or pause in the conflict have grown. The official government oil report for last week was released yesterday and provided little to support prices.  After falling by 6.4m barrels over the previous weeks the E.I.A. reported U.S. crude oil stocks climbed by 7.3m barrels taking reserves to the highest in almost a year.  

Markets this morning

Friday’s late declines have continued into this morning’s session with near NBP months down a further 2.25p on average. The front month has traded below the 70.00p mark with the latest trade at 69.60p while a little further out the curve, the Winter-2024 contract has yielded around 2.00p in early exchanges. Prompt prices are also showing weakness with the Day ahead product also threatening to go below the 70.00p mark.  GB gas demand is well down at 149mcm for today due to a tick up in temperatures and a rise in wind generation. Carbon EUAs are down by around 2.2% or an average of €1.50 while in the crude oil markets Brent is 62 cents lower at $88.88 a barrel.