The expected repair of the Sliepner Riser by the end of the week saw NBP prices decline on Tuesday

05 June 2024

Gas Market

Gas prices tumbled on Tuesday with prices declining to levels below last Friday’s closing assessment. News emerged from the operator of the Sleipner Riser that the crack in the pipeline is set to be repaired and the platform operational from Friday. The risk premium that had found its way into prices due to the initial uncertainty of the duration of the outage was quick to unwind once confirmation of the likely timeline was issued. The front month contract shed 6.53p/th, closing at 80.59p/th which is 1.24p/th lower than last Friday. Supply flexibility and continued weak demand also played a part with Day ahead declining by 5.70p/th despite such a large volume of gas being unavailable until Friday. Demand has failed to recover to pre-energy crisis levels and is continuing to decline, with May-24 European gas demand 7% lower than 2023 levels, and 24% less than the 2017 to 2021 average.  

Power Market

The 7.5% decline on the NBP front month contract pushed the Jul-24 GB baseload contract lower on Tuesday, closing at £75.50/MWh. Losses were not only limited to near term contracts as all contracts fell pressured lower by not only the falling gas market but also a 2% decline in both Dec-24 and Dec-25 UKA prices. The Day ahead contract also declined further with wind generation forecast to be 20% above seasonal average and solar output also expected to increase for the remainder of the week. On carbon markets, the Dec-24 EUA contract reduced drastically in the afternoon once the Sleipner Riser repair schedule was confirmed. The contract tracked gas prices lower falling from an intra-day high of €74.71 a tonne to €72.60.

Oil Market

The fallout from the Organisation of the Petroleum Exporting Countries and allies’ (OPEC+) meeting on Sunday continued to reverberate across global oil markets on Tuesday. Brent Front month, having hit a four-month low on Monday, continued to fall on Tuesday, trading at a low of $76.76 a barrel before settling at $77.52/bbl. The market remains uncertain of demand growth, despite OPEC+ signalling an increase in output from October for certain countries. At the meeting on Sunday the organisation agreed to an out for up to 8 members from the voluntary supply cuts implemented last year and continued into 2024.  

Markets this morning

The entirety of the energy complex is trading sideways at this early stage following yesterday’s decline. The front month NBP gas contract last traded at 81.41p/th as the contract eases back from early morning highs. The UK system remains well supplied with the system expected to be over 2mcm oversupplied ahead of the return of Norwegian flows later in the week. Brent crude for delivery in August is also trading at a slight premium of $77.67/bbl and it too is moving off early morning highs. Carbon markets are continuing yesterday’s decline with all traded contracts lower than last night’s assessment. The Dec-24 contract is currently trading at a discount to last night’s close at €72.09 a tonne.