Gas prices crept higher in a benign market on Friday with no major change to fundamentals

Gas Market

Gas prices crept higher once again on Friday as the front month added 1.33p/th closing at 74.36p/th. The contract ebbed and flowed in a tight range of 73.8p/th and 74.7p/th for the majority of the day. The contract did test lower at 73.06p/th and a high of 74.96p/th, but traded volumes at those extremes were thin and the market soon settled back into its range. The system for the day was finely balanced following a drop in demand of 12.5mcm as gas for power demand fell amid rising wind generation. Total gas demand at 162.8 mcm was 61.7mcm below seasonal norm, highlighting the continued weakness in demand that has persisted since the restriction on Russian gas supplies to Europe. Further scheduled Norwegian maintenance appears to be providing support despite the bearish demand and other fundamentals such as increased US LNG cargos.  

Power Market

A combination of an uptick on gas prices and a rising UKA Dec-24 contract contributed to lift GB baseload prices in 2024 higher. The winter-24 contract rose by 60 pence per MWh closing at £84.60/MWh. Further out prices shook off the NBP gains and took direction from the Dec-25 UKA contract that fell in value, and as a result baseload prices from 2025 made minor losses day on day. The Day ahead contract eased lower pressured by increasing wind speeds and strong solar generation. Carbon prices moved sideways in a thinly traded market as forward prices made minor losses of less than half a percent day on day. The Dec-24 contract fell by 34 cents to €70.52/tonne.  

Oil Market

Crude oil made its first weekly gain in three weeks amid hopes of firmer demand. The Brent front month contract for delivery in July eased higher by 71 cents closing at $83.98/bbl. Data from China showing industrial output rose by 6.7% in April compared to 4.5% in March ignited hopes that demand would improve. The country also announced steps to try and address the decline in its property market, another step the market found as positive with regards to future demand. China is the world’s largest importer and second largest consumer of oil. Further attacks on Russian oil refineries by Ukraine also added some support to prices, while reductions in stocks at global hubs signalled further demand recovery.  

Markets this morning

Gas curve prices are rising strongly in a prompt led rally. With major maintenance due on the Troll gas field and Kollsnes processing plant up to 330 mcm o gas could be removed from European gas supplies. The day ahead contract has increased by 4.00p/th from Friday’s close and has rippled through to the front month. The Jun-24 contract has gained 2.64p/th, having traded half a penny higher in early trading. The EUA carbon market is tracking gas prices higher in early trading. The Brent front month oil contract is down from its early high, as prices opened strongly following the death of the Iranian President in a helicopter crash.