Low demand and a comfortable gas system weighed on the NBP prompt on Wednesday

Gas Market

Low demand and a comfortable gas system weighed on the NBP prompt on Wednesday as prices fell by over 2.00p for the most part. Even with wind generation below seasonal norms at 4.0GW, gas demand remained around 150mcm for the day while exports to the Netherlands were increased as traders took advantage of a 3.00p discount to the TTF day ahead.  On the curve, near months held most of the early losses while longer contracts settled slightly higher with support arriving from increases to carbon. At the close, the June contract was 1.13p down at 74.73p while the Winter-2204 contract settled at 93.21p, reversing over half of Tuesday’s gains.  

Power Market

Weakness in the gas markets was countered by higher carbon prices yesterday as near GB baseload futures eased by around 1.2%.  The front month settled at £66.00/MWh having eased by £0.75/MWh, while further along the curve, the Winter-2024 contract was assessed flat.  Carbon EUAs picked up due to a pause in auctions for the next two days while investment funds have continued buying. The Spot for EUAs climbed by €1.23 to close at €70.06 per tonne. Baseload for the Day ahead eased yesterday despite wind generation being well below the seasonal norm.  Revised forecasts for Thursday have wind rising above 4.0GW and this coupled with the weakness in the NBP prompt left the Day ahead down by £3.63/MWh.  

Oil Market

The Energy Information Administration reported a 1.4m barrel draw on U.S. crude oil reserves which propped up the market yesterday. The American Petroleum Institute, an industry group, had expected a modest build in stocks which had pressured crude oil prices earlier in the session. Last week the EIA reported a large build in reserves of crude oil but an increase in refinery activity and exports contributed to the fall in the latest report.  Brent settled 42 cents a barrel higher but gains were capped by a stronger dollar yesterday, an increase in dollar strength makes the commodity more expensive to holders of other currencies.  Meanwhile hopes of a ceasefire in Gaza were kept alive as negotiations continued to bring both sides together yesterday.  

Markets this morning

NBP futures are flipping between gains and losses this morning as the market struggles to find direction.  The front month was 1.27p up on the last trade while the Winter-2024 contract was flat. Prompt prices are down marginally as the GB gas system is forecast long again today and demand remains muted at 148mcm. Crude oil prices have continued to edge higher after the EIA reported a draw on U.S. crude oil reserves for the last week. Brent last traded at $83.90 a barrel which is 32 cents above last night’s close.