Spot for NBP prompt is down over a penny this morning

Gas Market

Concerns of tight supplies drove natural gas prices higher across Europe on Monday.  With low wind forecast for much of the northern continent and planned maintenance on key Norwegian processing sites due to start on Tuesday prompt prices rose by up to 4.00p per therm yesterday.  Gas demand is expected to pick up due to the low wind availability while most of the restrictions to Norwegian gas flows at Kollsnes and the Troll field is scheduled for Tuesday and Wednesday. The Spot and Day ahead closed at 77.50p yesterday posting gains of 4.00p and 3.25p respectively.  The increases on the prompt fed into the near curve with the June contract for the NBP settling 2.34p higher at 76.70p.  Longer curve contracts found support from rising carbon prices.  

Power Market

Strong gains to carbon along with higher gas futures boosted the GB baseload curve yesterday. Carbon UKAs gained 6.5% in response to increased demand for fossil power as wind generation declines.  There was a degree of speculative buying which also added support to carbon as EUAs returned to a four-month high as the Spot closed at €72.34 per tonne, up €3.65 per tonne. At the close, the front month for the baseload curve was £3.47/MWh higher. Baseload for the Day ahead added £5.97/MWh yesterday as the prompt market responded to the forecasts for low wind speeds. Increased solar power made up for some of the low wind levels yesterday but is not expected to retain this performance over the week.

Oil Market

After three gains in succession the global benchmark yielded some premium in response to expectations that the U.S. Fed will hold interest rates at current level.  It’s expected that there will be much chat about U.S. intertest rates this week from the Fed but Vice Chairman Michael Barr is disappointed with current inflation levels despite an improved result for April.  He has said more observation is required for now to ensure economic growth is on the right trajectory. Crude oil prices had traded higher earlier in the session following the news of the death of the Iranian president but the gains were reversed when it was confirmed that the helicopter crash was accidental.  

Markets this morning

The Spot is down over a penny this morning as the GB gas system is forecast long by 28mcm.  Demand is lower than originally forecast, which has helped as scheduled maintenance works begin at Kollsnes and the Troll field.  On the curve, NBP futures are directionless, but the latest trades have seen the front month move a half a penny lower at 76.20p. Some of the strong gains to carbon have been reversed in early trading with the Dec-24 contract 90 cent down at €73.32 per tonne. The July contract for Brent has slipped below the $83.00 a barrel mark this morning as the U.S. Fed likely to wait for more evidence that inflation is slowing before reducing interest rates.