Gas futures reverse most of yesterdays gains as the front month is 2.41p lower at 82.92p

Gas Market

There was another volatile day for the gas markets yesterday as the near NBP curve reacted to unplanned outages and gains in Europe.  Reports that Russian gas supplies through Ukraine to Austria may be cut boosted European gas prices yesterday. The market has concerns that the threat to supplies could go further and impact gas transiting to Slovakia and Hungary. The capacity of the gas line through Ukraine is 42mcm per day.  Yesterday’s price gains maybe an overreaction as the Austrian energy regulator, E-Control, has said gas reserves in storage are currently above 70% of capacity and it is possible to source supplies from Germany or Italy if required.  Delayed restarts at Kollsnes and the Troll field also added to the volatility yesterday while wind generation fell short of forecast levels.  Prompt prices for the NBP settled an average of 4.00p higher while gains to near months were pared back and settled 2.65p up on average.  

Power Market

GB baseload power edged higher on Thursday with support from the volatility on the NBP providing the lift.  Gains to power futures were tempered with mixed carbon prices on the day as UKAs consolidated recent increases while EUAs eased back off four-month highs.  On the baseload curve, the front month settled £1.63/MWh higher at £76.88/MWh while gains diminished as the curve moved out. Wind was forecast to above 12.0GW for Thursday but failed to get near that level which brought more gas fired generators into the supply mix.  The day ahead baseload rose sharply as wind speeds were forecast lower again for Friday and closed at £84.14/MWh.

Oil Market

The slump for crude oil prices carried into Thursday as prices fell for a fourth session in a row. Brent settled 54 cents a barrel lower at $81.36 while West Texas Intermediate fell by 70 cents to $76.87 a barrel as the divergence between the two benchmarks widened further.  The wider the margin, the more profitable it is for energy companies to take oil exports from the U.S. Crude oil prices remain weak due to uncertainty around the U.S. inflation with recent surveys showing business activity is picking up, however, manufacturers are reporting a swell in a range of prices which will add to inflation for the month.  It’s doubtful that interest rates will be lowered for the time being after the latest policy meeting for the U.S. Fed this week. A drop in interest rates lowers costs for borrowing and could boost economic demand.  

Markets this morning

As the UK bank holiday weekend approaches, NBP futures have eased off yesterday’s four-month high.  The front month is 2.41p lower at 82.92p while the Winter-2024 contract has eased by 1.67p to 102.90p.  Prompt prices are unmoved but a short gas system maybe countering the downward shift.  The unplanned outage at the Troll field has been resolved while process problems are curtailing around 10.0mcm from Kollsnes following planned maintenance earlier in the week. Carbon EUAs for 2024 and 2025 are down by around €1.00 per tonne this morning and in the crude oil markets, Brent is threatening to fall below the significant $80 a barrel marker and is down by 62 cents a barrel.