Natural gas prices have edged lower this morning

20 June 2024

Gas Market

NBP prices fluctuated between negative and positive territory on Wednesday, with prices across both the prompt and curve ultimately settling above their previous close. Fears around potential US LNG curtailments due to tropical storms in the Gulf of Mexico region helped to lift the near curve, with July-24 closing 2% higher day on day at 82.86 pence per therm. There is currently just one LNG cargo scheduled to arrive into the UK by the end of June. News that import capacity into the UK via the BBL pipeline would be reduced from Wednesday as well as an extension to maintenance at the Visund facility provided additional upward pressure to prompt prices. The Day ahead contract posted a gain of 1.625p to finish the day at 83.55p.  

Power Market

GB Baseload power contracts tracked the gains observed on the NBP curve on Wednesday. The front month, July settled at £74.60/MWh, an increase of just under 1% day on day while Winter-24 posted a 1.23% increase to close at £90.90/MWh. On the prompt, below average wind generation forecasts could be offset by above average solar power production over the coming days. GB Baseload for Day ahead settled 2.47% higher day on day at £82.90/MWh. Minor losses observed in carbon markets provided little downside with the UKA December-24 contract shedding just under 2% day on day.

Oil Market

Brent crude made minor losses on Wednesday after reports of a build in US crude oil stocks mitigated the ongoing upward pressure provided by geopolitical concerns. The American Petroleum Institute (API) inventory numbers were released late on Tuesday showing an unexpected build in crude stocks of 2.26 million barrels, official figures will be released on Thursday owing to the Federal holiday on Wednesday. Further weak economic indicators are doing little to reduce the impact of instability in the Middle East region. Tensions are rising between Israel and Hezbollah in Lebanon, while fresh drone attacks on Russian fuel depots are adding to the instability. Crude oil for delivery in August settled at $85.07/bbl, 3% higher than one week ago, and 13% higher year on year.

Markets this morning

Temperatures are set to increase from today, while gas for power demand is forecast to pick up to compensate for lower wind generation in the power stack. As a result of the increased demand, prompt prices have opened a touch higher this morning despite the gas system showing a surplus. The Day ahead contract is trading about half a penny above yesterday’s settlement at just under 84 pence per therm. An unknown end date for maintenance at the Visund facility, on top of other ongoing maintenance outages, are contributing factors to the upside.  Near futures are trading sideways with the latest trade for July going through at 82.80p per therm.