Gas is flowing at anticipated levels from Norway following the resumption of activities at the Nyhamna processing plant

07 June 2024

Gas Market 

Thursday saw NBP prices trade sideways as contracts oscillated close to Wednesday’s close for much of the session. With confirmation on Wednesday that the leak at the Sleipner Riser platform should be rectified by Friday, and a plan for the ramp up in production capacity at Nyhamna released, the market was directionless as it awaited its impending return. Illustrating the ebbs and flows of the session, although contracts settled on the ICE exchange at a slight premium, trades following the settlement period were all showing a day-on-day decline. The front month Jul-24 contract, for example, settled at 80.53p/th, posting a gain of 1.19p/th, but the contract traded below 79.00p/th before the market closed. This pattern was witnessed across the near curve.

Power Market

GB Baseload contracts tracked the NBP movements, with the uninspired gas market resulting in minor gains and losses across the baseload curve. The front month contract increased by a mere 35 pence to £73.35/MWh, while the winter-24 contract fell by 15 pence to £87.95/MWh. Further out an increase of 1% in UKA carbon prices pushed longer dated contracts higher. The day ahead contract declined by almost 15% with an increase in renewables offsetting gas for power demand. The Dec-24 EUA contract was rangebound yesterday, trading in a tight range of €71 to €73 per tonne for the day. Much like gas and power, the contract moved sideways at settlement as it was assessed at €71.70/tonne, a decline of 25 cent.

Oil Market

Oil prices continued their recent upward trajectory buoyed by the European Central Bank’s interest rate cut down from 4.00% to 3.75% yesterday. Markets see this a positive factor with the potential to spur on demand for oil this summer. The ECB’s rate cut also fed into the belief that the Federal Reserve will follow suit and cut interest rates in the US this September. Latest economic data from the US indicating a cooling labour market is also adding pressure to the Fed Reserve to instigate rate cuts. The impact of the interest rate cut, and the economic data saw Brent crude increase by $1.46/bbl to $79.87, with the West Texas Intermediate front month contract increase by $1.48/bbl to $75.55.  

Markets this morning

Gas is flowing at anticipated levels from Norway following the resumption of activities at the Nyhamna processing plant. Flows via the Langeled pipeline are at 41mcm up from zero yesterday. As a result, gas prices have slowly been unwinding some additional premium with the Jul-24 contract last trading at 79.4p/th and winter-24 down a quarter of a penny at 97.25p/th. Crude oil is trading sideways following yesterday’s bullish movements. News that China’s imports of crude oil in the month of May are down 8.7% compared to 2023 levels is tempering the impetus created by the ECB’s interest rate cut yesterday.