NBP Gas contracts moved sideways as prices oscillated close to Wednesday’s close

28 June 2024

Gas Market

The sideways momentum continued on the NBP on Thursday with prompt and curve contracts partially retracing losses posted during the previous session. Initial upside over the course of the morning was overcome once again by a late decline as the market remained rangebound. On its final day of trade the front month, reluctant to stay below the 80p level, expired at 80.76p per therm, a day on day increase of 1.75p. The incoming front month, August-24 settled higher by 1.84p to close at 82.35p per therm. Direction on the prompt was uncertain with support stemming from the commencement of maintenance on the Langeled pipeline beginning from Friday, while downward pressure was provided by system length and an expected increase in UK Continental Shelf (UKCS) capacity over the coming two weeks.   Power Market The influence of gas markets decided the direction of GB Baseload products on Thursday with most contracts tracking the NBP up. Upside was limited however as renewable power production forecasts remain strong into next week, while temperatures are also forecast to stay around seasonal normal levels. The July-24 contract posted a gain of just £0.80/MWh to settle at £72.80/MWh, while winter-24 moved to £88.55/MWh, an increase of 33p. Carbon markets found their own direction, with Wednesday’s losses continuing into Thursday as activity appeared to slow towards the end of the quarter and the impending peak holiday season. The Dec-24 EUA contract fell to a new 2-month low to settle at €65.20 a tonne, down 59 cents day on day.  

Oil Market

Crude oil prices edged back up on Thursday to breach the previous 2-month high set on Monday. Geopolitical risk premiums rose on reports of intense fighting in Gaza, while tensions between Israel and Lebanon’s Hezbollah have also been escalating, leading to concerns that a widening war could draw in other countries including major oil producer Iran. The US dollar was also observed to have weakened against other major currencies, which spurred buying activity and added to the upward momentum. Brent for August delivery, which will expire today as the front month, settled at $86.39 a barrel, a day on day increase of $1.14. West Texas Intermediate (WTI) front month closed out at $81.74 a barrel, up 84 cents.  

Markets this morning

NBP futures have opened in negative territory this morning with the new front month contract, August-24, shedding just under 2p on Thursday’s close to last trade at 80.48p per therm. Prompt prices are flat with the GB system operating in a long position. A significant proportion of renewables in the power stack today should take the pressure off gas-for-power demand levels, a trend likely to continue into next week. In the crude oil markets, front month Brent continues to edge higher, adding 57 cents on its previous close already this morning, with support likely stemming from heightening tensions in the Middle East.