Declines seen across the NBP on Monday, with the near curve making the biggest losses

02 July 2024

Gas Market

A more pronounced downturn in prices, particularly on the near curve, was observed across the NBP gas market on Monday. August-24, now trading as the new front month, fell by almost 5.00p from an intra-day high of 83.15p per therm to settle at 78.30p. The losses continued on the prompt, albeit to a lesser extent, with the Day ahead contract posting a loss of 0.78p to settle at 78.88p per therm. A short GB system was mitigated by a high proportion of renewables in the power stack which relieved demand for gas from the power generation sector, while supplies from Norway and the UK Continental Shelf (UKCS) remained robust. LNG arrivals in June have fallen by 49.3% year on year. However, with UK LNG storage levels currently sitting at 84.5% full, this doesn’t appear to be a concern for the market for now. There is currently 1 LNG cargo expected to arrive into the UK between now and the end of next week

Power Market

Contracts across both the GB Baseload prompt and curve shed value on Monday. Downward pressure arrived in the form of weakness across the NBP near curve as well as strong wind generation forecasts with levels expected to be more than 20% above seasonal normal levels for the rest of the week.  The incoming front month August-24 fell by over 3% day on day to close at £70.00/MWh, while winter-24 moved to £88.43/MWh, a decrease of £0.80/MWh. In contrast to the losses observed across gas and power markets on Monday, European carbon prices moved upwards while UKAs moved sideways. The outcome of the first round of France’s parliamentary elections provided support to the EUAs, with the Dec-24 contract rising by just under 1 euro to close at €68.32/tonne.

Oil Market

In crude oil markets, having initially retreated back below the $86.00 a barrel level in early trade on Monday, prices picked back up again before the close of play, resulting in another 2-month high for front month Brent. Hopes of an interest rate cut by the U.S Federal Reserve which would provide an economic stimulus coupled with the continuation of geopolitical tensions in the Middle East have kept prices elevated. Forecasts of a potential supply deficit due to the onset of the peak summer oil demand period and OPEC+ production cuts fanned the upward momentum, while weak economic indicators from China as well as positive non-OPEC+ output mitigated the potential upside. The September Brent contract, now trading as the front month settled the day at $86.60 a barrel, an increase of $1.60 and the highest front month settlement since April 30th. The West Texas Intermediate (WTI) front month increased by $1.84 a barrel to finish at $83.38.

Markets this morning

Near months for the NBP have opened above their previous close but gains are so far muted. August-24 last traded at 78.47p per therm, an increase of just 0.17p on Monday’s close. In contrast, the Day ahead contract has continued it’s previous downward trend, last trading this morning at 78p per therm, down 0.88p day on day despite the GB system operating in short position. Demand levels are lower day on day, curbed by high solar and wind levels in the power stack. In crude oil markets, front month Brent continues its incline, breaching above the $87 a barrel level this morning to last trade at $87.03. Upward momentum is being driven by expectations for rising fuel demand levels over the remainder of the summer.