The front month contract for the NBP shed 3.0% or 2.47p per therm on Thursday

21 June 2024

Gas Market

NBP near curve contracts appeared to take their direction from downside exhibited on the prompt on Thursday. The Day ahead and Balance of Month contracts posted the biggest losses, shedding 3 pence per therm each day-on-day. A forecasted increase in wind levels for the rest of the week, coupled with an oversupplied system and softening demand levels, all combined to push the prompt down. News that the outage at Norway’s Visund facility will continue until June 25th did little to shake off the bear’s influence. Likewise, the front month contract shed 3.0% day-on-day to close at 80.39p, while the Winter-24 contract fell by just under a penny. News of the EU’s latest sanctions on Russia also appeared to add to the weakness. The sanctions would mean that transshipments of Russian LNG through Europe would be banned, potentially adding to regional supply volumes.  

Power Market

Losses observed across the NBP and carbon markets on Thursday fed into weakness in GB Baseload prices. Wind output forecasts for next week are now in line with seasonal normal levels which added to the downside. The July-24 contract settled at £72.25/MWh, a loss of £2.85/MWh day on day. Losses further out were slightly more muted, with the Winter-24 contract shedding £1.63/MWh day on day to close at £88.60/MWh. Trade across carbon markets was more choppy on Thursday, with Dec-24 EUAs hitting a five-year high early on due to a surge in TTF prices. However, once the TTF retracted on news of the latest set of Russian LNG sanctions carbon began to drop also. The UKA December-24 contract fell by 7.6% day on day.

Oil Market

Crude oil prices are on target to post a second weekly gain after Brent and WTI settled higher on Thursday.  The global benchmark set a fresh seven-week high yesterday, settling at $85.71 a barrel as prices received support from the official U.S. inventory data report.  Earlier in the week, the industry group, American Petroleum Institute, reported a build in crude oil reserves, but data released by the Energy Information Administration yesterday showed a draw of 2.5m barrels in crude oil stocks last week. The data boosted sentiment that demand is climbing and with OPEC+ committing to extend the voluntary production cuts supply margins are expected to tighten in the back half of the year which would price supportive. Geopolitical risk is also a concern for the market as tensions in the Middle East rise with Israel continuing with air strikes on Gaza yesterday while tanks advanced into the southern border city of Rafah.

Markets this morning

The energy markets are subdued this morning with NBP prompt and futures trading sideways while movement to carbon EUAs is limited too.  The July contract moves into its last week as front month for the NBP and has traded in a tight range of a penny so far with the high at 81.05p per therm and the low of 80.20p. Prompt prices have also to get off the mark, but demand on the gas system is forecast lower for today at 130mcm and supplies are long by 6mcm which should pressure the Spot. In the crude oil markets, Brent has reversed some of the premium added yesterday and is 33 cents lower at $85.38 a barrel.