Tuesday saw a choppy NBP market with contracts recovering some of Monday’s losses as market fundamentals remain strong

03 July 2024

Gas Market

The NBP gas market oscillated close to Monday’s close for much of yesterday’s session. For the most part contracts traded below Monday’s close as the front season, Winter-24 fell to an intra-day low of 98.50p/th before recovering juts prior to the close, posting a day-on-day gain of 1.13p/th to close at 99.94p/th. Similarly, the front month posted an intra-day loss of 1.00p/th before the recovery before the close say the Aug-24 contract settle at 78.73p/th. Market fundamentals remained strong yesterday, with minor short term supply issues that were rectified on the day, and weak demand continuing. The market seemed to be taking stock of the previous day’s losses while also a short system provided some support to prices. On the prompt Day ahead declined amid decreased demand for gas for power generation while the Spot contract was supported by an outage on the UK continental shelf.  

Power Market

GB baseload contracts tracked the NBP gas market lower in early trading, before the late rally on gas markets fed through to the power market. The Q4-24 baseload contract increased by 1.49% with the majority of the gains attributed to the late increase on gas markets. However, prices were also supported by a late rally on the UKA allowance market. On the prompt the Day ahead market fell due to an expected increase in wind generation, with wind assets expected to add 11GW of power across Wednesday.   On the EUA market, the Dec-24 allowances contract increased by €2.63 per tonne to €70.95. While the initial momentum was generated by the gas price movements, reports of speculative trading also helped push the carbon allowance prices higher.  

Oil Market

Brent Crude made minor losses on Tuesday with the front month contract closing at $86.24 per barrel, following the $1.60/bbl increase on Monday. Providing early support to prices is the impending Hurricane Beryl that is currently moving through the Caribbean Sea and heading for the Gulf of Mexico. The upside to oil prices was tempered by the fact Beryl is expected to decline to a tropical storm before it enters the Gulf and is currently expected to miss major offshore oil platforms in the area, although some closer to the Mexican shore may shut for safety. Demand for gasoline and jet fuel is expected to increase in the coming days as the US travel is expected to heighten due to Independence Day holiday later in the week.  

Markets this morning

Following the resumption of flows at the Barrow terminal the UK gas system is currently 19mcm oversupplied. As a result, prompt prices are in decline with the Day ahead contract last trading at 76.10p/th. The bearish sentiment is also seeping through to the curve contracts as the market recognises the continued strong fundamentals and all supply issues appear to have been rectified. The front month, Aug-24, last traded at 76.32p/th with the Winter-24 contract trading 1.53p/th lower than last night’s settlement. Oil markets are little moved with the last trade at $86.25/bbl for Brent front month on a par with Tuesday’s close.