NBP futures continued to fall on Tuesday as August, the front month settled at 72.79p per therm, its lowest point since early May

Gas Market

Fundamentals remained bearish on Tuesday as near NBP futures settled an average of 2.28p per therm lower. Wind forecasts have been revised higher for next week which should curb gas demand for generation.  Meanwhile LNG deliveries to Europe have stepped up with the Netherlands expecting four further cargoes over the next week or so while Belgium has three deliveries penciled in for later this week.  LNG demand in Asia is expected to taper off towards the end of summer which could allow to Europe compete for more supplies. At the close, the front month settled at 72.79p which is the lowest settlement for August since early May.  The Winter-2024 declined by 2.32p to close at 94.07p yesterday.  Prompt prices also posted significant losses with the Spot yielding 2.78p while the Balance of month product was 5.95p down at 71.50p.  

Power Market 

GB baseload futures eased yesterday with lower gas and carbon weighing. The August contract declined by £2.10/MWh to settle at £64.90/MWh while the front winter contract was assessed £1.90/MWh lower and closed at £84.50/MWh. Improved wind forecasts for the remainder of the week and into next week pressured the prompt on Tuesday and baseload for the Day ahead fell by £6.78/MWh to close at £65.02/MWh. Weak gas prices encouraged a selloff in carbon prices yesterday. The Spot for EUAs settled 43 cent down at €67.26 per tonne while the Dec-24 contract settled at €68.48, down 54 cent per tonne. UKA contracts for 2024 and 2025 settled over 1.2% lower on the day.

Oil Market 

Crude oil prices fell for a third day on Tuesday after early reports suggested very little supply disruptions in the Gulf of Mexico following the impact of hurricane Beryl.  While many refineries in Texas and the Gulf were shut down for safety before Beryl made landfall, most have come through unscathed and were already starting to ramp up yesterday. The U.S. Fed Chair, Jerome Powell, raised hopes of an interest rate cut sooner after he told a Congressional meeting that the economy was no longer overheated yesterday.  This may have added to the downside yesterday as a weaker economy will curb demand for crude oil.  Hopes of a ceasefire in the Middle East were high yesterday but it’s believed there are still gaps between the two sides, however, Israel’s continued attacks on Gaza put the deal at risk.  

Markets this morning

Gas futures opened slightly higher this morning but latest trades for the front months are just below last night’s close. The August contract last traded at 72.71p having traded up to 73.68p earlier.  Further out the curve, futures are flat with the Winter contract yet to show a trade on the ICE platform.  Prompt prices are also moving sideways this morning while the GB gas system is showing a healthy surplus of 11mcm.  Carbon EUAs have recovered some of yesterday’s losses with the Dec-24 contract last going through at €68.91 per tonne while in the crude oil markets, Brent is 30 cents up at $84.96 a barrel.