Rising temperatures are contributing to the decline on the NBP gas market this morning

17 June 2024

Gas Market

NBP gas prices returned to decline on Friday following confirmation from Chevron that they expect the issue at the Wheatstone LNG facility to be rectified by the 27th of June. The news eased some of the concerns for a prolonged redirection of LNG from European shores to Asia in order to cover the shortfall of Australian LNG for the region. The front month posted a daily low of 81.79p/th while the bellwether Winter-24 contract fell to 99.25p/th before markets began to recover some of the losses. Behind the upward movements were reports of shelling by Ukraine on Russian gas pipelines. However, contracts soon rediscovered their downward momentum as confirmation reached the markets shortly before the close that the infrastructure had not taken any damage.  

Power Market

The GB baseload power curve fell in tandem with declines on the NBP gas market. The front season, Winter-24 fell by 20 pence following the minor losses on the gas curve. Further along the curve, power prices were also pressured lower by a strong decline on the UK carbon market. Both the 2024 and 2025 UKA contract fell by 1.6% in trading Friday which pressured longer dated power contracts, resulting in Summer-25 declining by £0.88/MWh to £77.35/MWh. Carbon prices declined on Friday, tracking European gas prices lower in early trading. However, the relationship diverged int he afternoon as carbon ignored gains on gas markets due to shelling on Eastern European and slide further into decline with Dec-24 posting a loss of €2.21/tonne

Oil Market

Brent crude oil increased by 4% week on week despite a slight decline on Friday. The front month contract fell by 13 cents to $82.62/bbl following a week of small but consistent increases. The increases were driven by forecasts of elevated demand by both the International Energy Agency and the Organisation of Petroleum Exporting Countries forecasting dwindling stocks over the summer and varying levels of increased demand for the rest of 2024 and into 2025. However economic data from the US and China on Friday dampened the market’s expectations while a strengthening dollar also weighed on the oil demand outlook, as both WTI and Brent finished the week in decline.  

Markets this morning

Despite a marginally short UK system, gas prices continue to tumble in early trading so far this morning. The front month contract has fallen by 1.50p/th with the Q3-24 contract shedding 1.42p/th. The unravelling of the risk premium from the Wheatstone LNG issue continues while rising temperatures in the UK is dampening demand for gas for heat purposes. Brent crude oil is unchanged compared to Friday’s close with weak Chinese economic data vying with hopes of increased demand for control of the market. The carbon market also continues its decline from Friday with the Dec-24 contract last trading at a discount of 50 cents per tonne to Friday’s close.