Early gains to the NBP near curve have been reversed and the front month is down almost 3.70p intra-day this morning

Gas Market

After the sharp gains on Thursday the gas markets were undecided on the bank holiday Friday as near futures flip flopped between gains and losses through the day.  The front month traded within a tight range with the peak of the day at 77.67p per therm while the low was 73.50p.  GB gas demand remained subdued at 160mcm, and the early surplus had eroded by 4.00pm when the system was in balance despite several key Norwegian plants undergoing planned maintenance which are scheduled to run until Friday for some units. At the market close, the June contract was down by almost a penny to 74.47p while the Winter-2024 contract settled at 92.60p with a loss of 0.71p which cut the gain for the week for winter to 3.56p.  Prompt prices also softened with the Day ahead closing 2.50p down while the Balance of month product yielded 1.10p.  

Power Market

Baseload futures for the UK followed gas and carbon lower late on Friday as near months settled with modest losses.  The June contract closed just £0.60/MWh down on the day but was £3.15/MWh higher for the week.  The Winter contract was just £1.58/MWh higher for the week having surrendered £1.63/MWh over Friday’s session.  Forecasts for lower wind generation propped up the Day ahead product which settled £5.00/MWh higher on the day. A sell off by investors weakened carbon prices on Friday amid an element of profit taking following Thursday’s gains.  EUA contracts for Dec-2024 and Dec-2025 eased by 1.0% to close at €71.95 and $74.73 per tonne respectively.  

Oil Market

Crude oil prices ended the week in decline with Brent easing by 71 cents a barrel on Friday.  Geopolitical risk has diminished as hopes for a truce in Gaza continued as talks progressed in Egypt. Economic data from the U.S. disappointed and with the inflation rate moving away from the target rate of 2.0%, the U.S. Fed deferred lowering the rates to later in the year.  The markets had anticipated that a cut in interest rates was unlikely this month but the Fed’s statement during the week dented hopes of a cut in the near term. With crude oil prices falling back towards the $80 a barrel mark, it is likely that OPEC+ will agree to extend the production cuts into July at their next meeting in June.  

Markets this morning

The crude oil markets were open yesterday, but trading was limited on the day and Brent retraced Friday’s losses to settle 37 cents higher at $83.33 a barrel. Hamas are believed to be in favour of accepting the latest truce proposal, but Israel say it falls short of their demands and have continued to bombard Rafah this morning. The July contract for Brent continued to edge higher earlier but the last trade has gone through flat at $83.38 a barrel.  In the gas markets, early gains to the NBP near curve have been reversed and the front month is down almost 3.70p intra-day to last trade at 74.70p. The prompt market is still dormant after the long weekend but the gas system is comfortable with a modest surplus.