Some comfort returned to the gas markets on Friday

27 May 2024

Gas Market

The unplanned outages at Kollsnes and the Troll field were resolved on Friday which returned some comfort to the markets and gas prices eased.  There are still some planned maintenance works ongoing at Norwegian plants, but these are scheduled to wind down over the next week or so.  Concerns about tight supplies in central Europe also eased on Friday and near NBP futures declined by an average of 3.20p per therm.  The front month settled 3.43p lower at 81.90p but was up 7.54p for the week. Prompt prices for the NBP shrugged off a short system on Friday and the Spot price yielded 3.63p over the session.  With Monday being a bank holiday in the UK, the Day ahead contract applies to Tuesday and this fell by 3.70p to settle at 82.35p.  

Power Market

The decline in NBP futures pressured the baseload curve on Friday as contracts for the remaining summer months shed over £2.00/MWh.  The June contract eased by £2.38/MWh to settle at £74.50/MWh, but for the week the contract was £7.38/MWh higher. Carbon prices settled mixed and gains to UKAs limited losses to longer baseload curve contracts. UKAs for 2024 and 2025 rose by 3.8% or £1.72 per tonne on Friday. Baseload for the Day ahead settled lower with pressure arriving from declines to the NBP prompt and forecasts for increased wind generation for the week ahead.  The contract settled £3.83/MWh down at £80.31/MWh.

Oil Market

With the Memorial Day holiday for the U.S. on Monday signalling the start of the U.S. driving season crude oil prices increased on Friday snapping a four-day losing streak. It was the longest losing slide for prices since the start of the year.  Crude oil prices had weakened over the week due to U.S. inflation concerns when there was some talk of possibly increasing U.S. interest rates but the chair of Federal Reserve, Jerome Powell, ruled this prospect out for the time being.   Reports that Russia exceeded it’s production quota for April raised questions about whether OPEC+ can maintain their current production cuts into the third quarter.  The group are due to meet online in early next month to discuss the possibility of extending the voluntary cuts of 2.2m barrels per day past June.  

Markets this morning

There are no gas markets in the UK today due to the bank holiday. Gas demand is pitched at 145mcm for today and the system is showing a modest surplus according to the national Grid.  The Carbon EUA market is active with contracts for 2024 and 2025 have ticked up in early trading this morning.  The Memorial Day holiday weekend in the U.S. will limit trading for crude oil today and initial trades for the global benchmark have been close to Friday’s close with the latest exchange completed at $82.09 a barrel.