Crude oil prices settled higher after hopes of a cut in U.S. interest rates were stoked again

Gas Market

 NBP futures oscillated above Wednesdays close during yesterday’s session with contracts briefly dipping lower before settling with modest gains.  The GB gas system was undersupplied for much of the session as demand increased to almost 170mcm as lower wind generation required gas generators to compensate for the drop off in renewables in the power stack. An unplanned outage at Norway’s Asgard field tightened supplies on the day. The short system provided support to the Spot and Day ahead products which ended the session 2.90p and 1.20p higher.  After four days of declines, near NBP months recovered some of the recent losses yesterday but remain around 5.65p down for the last five days.  The August contract added 0.96p to close at 72.17p yesterday, which is just above the recent nine-week low.  In the U.S., the Freeport LNG facility remained offline due to electrical outages after hurricane Beryl made landfall earlier in the week.

Power Market

Thursday brought the first increases for the GB baseload curve in a week.  The market garnered support from the uptick on the NBP curve while carbon prices were mixed yesterday.  The front month for the power curve added £0.40/MWh to close at £63.90/MWh while gains to longer curve were more muted with contracts past next summer easing slightly. There was a slight reduction for the Day ahead as wind speed are expected to be higher on Friday. Carbon EUAs appeared to follow gas higher yesterday as the Spot closed at €67.25 per tonne posting a gain of 47 cent. Meanwhile UKAs moved in the opposing direction with contracts for Dec-2024 and Dec-2025 down by 1.5% or 64p per tonne on average.  

Oil Market

  Hopes of an interest rate cut as soon as September were stoked again yesterday following the latest slowdown in U.S. inflation. Consumer prices fell during June for the world’s largest oil consuming nation and it is now believed the Federal Reserve will introduce the first rate decrease in September.  Chair of the Fed, Jerome Powell, continues to hold the line of more data is required but did acknowledge the trend is going in the right direction yesterday.  A decrease in interest rates is likely to encourage more economic activity and so increase demand for oil.  Wednesday’s report from the EIA which showed U.S. crude oil inventories were down by 3.4m barrels last week also added to the upside yesterday. The September contract for Brent settled 32 cents up at $85.40 a barrel.