NBP futures softened late in the session on Wednesday

27 June 2024

Gas Market

The weeks’ upward momentum continued into early trade on Wednesday morning across the NBP prompt and curve. Having breached the 83p per therm level in the morning session the front month contract softened ahead of the close to settle at 79.01p, a loss of 3% day on day. Prompt contracts followed a similar trend throughout the day with Day ahead eventually closing at 79.88p per therm, down 2.69p on Tuesday. With the market maintaining its sensitivity to minor risk, the initial upside was provided by limitations on the Langeled pipeline which was reported to reduce Norwegian imports by 10mcm per day from Thursday as well as an extension to maintenance at the Barrow North facility. However, a long GB system and a forecasted substantial increase in wind generation for the remainder of the week and into next week was enough to shake off the bulls influence.  

Power Market

Following the direction set out by NBP gas prices, GB Baseload contracts were also in decline on Wednesday. An upwards revision to wind generation forecasts for the rest of the week to more than 20% above seasonal normal levels as well as solar production being forecast at up to 20% above seasonal norms helped the market to soften. The July-24 contract retreated by £2.25/MWh to settle at £72.00/MWh, while winter-24 moved to £88.23/MWh, a loss of £1.45. Carbon markets followed the trend set out by gas, making early gains only to fall back before the close. The extent of the losses allowed the Dec-24 EUA contract to fall to its lowest level since late April, decreasing by 1% day on day to settle at €65.79 a tonne.  

Oil Market

Crude oil prices were influenced by the latest report from the Energy Information Administration on Wednesday as prices dipped following the release of the weeks inventory figures.  U.S. crude oil reserves increased by 3.6m barrels in the week to 21-June while gasoline stocks also grew which was a disappointment given the U.S. summer driving season is well underway. The dip in prices due to demand concerns was short lived as tensions between Israel and Lebanon were once again to the fore. There are concerns that the war could draw in neighbouring countries like Iran and impact oil production in the area as Turkey’s President sided with Lebanon yesterday and called for more support from the region. At the close, Brent was 24 cents up at $85.25 a barrel.  

Markets this morning

NBP futures have increased this morning with near months around 1.50p higher after yesterday’s late dip in prices has encouraged buying activity on the front month and front quarter which expire on the ICE platform today.  Prompt prices are flat with GB gas demand for the day pitched at 137mcm and the system is operating in equilibrium.  Increased wind generation has dented gas demand today and is expected to curb the requirement for gas fired generation into next week.  In the crude oil markets, Brent has added 44 cents to the price of a barrel this morning with tensions in the Middle East heating up.