Brent posted it largest one-day loss since early June

Gas Market

Near curve and prompt prices for the NBP rebounded on Tuesday with support coming from a tight gas system due to planned maintenance works and reports of an outage at Freeport’s LNG facility in Texas. The front month was up over 4.50p per therm reaching an intra-day high of 76.93p before settling at 76.25p. Freeport began to ramp up production last Friday after electrical issues had suspended production in the wake of hurricane Beryl last week. However, nominations fell close to zero on Monday which raised concerns for LNG deliveries to Europe this morning. The issue may not have had such an impact on the market, but the timing has coincided with planned maintenance works at several key Norwegian plants this week.  GB gas demand picked up over the session too, which left the system with a modest deficit and the Spot and Day ahead products were buoyed as they settled 4.10p and 1.75p higher.

Power Market

The strong gains on the near NBP curve provided support to the baseload futures on Tuesday.  Carbon prices also firmed on the day having traded lower earlier in the session.  At the close the front month settled at £66.50/MWh which was a gain of £3.00/MWh day-on-day. Further out the Winter-2024 contract was less impacted and recorded a gain of £1.80/MWh, to settle at £84.65/MWh.  Carbon EUAs reversed early losses and the Dec-24 contract settled €0.52 higher at €68.05 per tonne. Baseload for the Day ahead took support from the NBP prompt yesterday but forecasts for increased wind generation limited gains on the day.  At the close, the contract was £3.90/MWh higher at £74.50/MWh.

Oil Market

The front month Brent contract recorded its largest one-day loss since early June yesterday following more woes from the Chinese economy. The government are working on stimulus programs to reignite the economy but so far, most efforts from the administration in China have come up short. The worlds second largest oil consumer’s economy grew at its slowest rate since the first quarter of 2023 amid struggles in the property and jobs markets. The International Monetary Fund expects the global economy to increase modestly over the next two years with the U.S. expected to slow slightly but it forecasts improved growth for China and now matches the government’s target of 5.0% for this year. At the close, the global benchmark was $1.12 lower at $83.73 a barrel just 11 cents above the 50-day average.

Markets this morning

The GB gas system is in better shape this morning with the demand of 171mcm being matched by supplies which have recovered from an earlier deficit.  Prompt prices reacted to the short system and have not traded since the system has balanced so the Day ahead product is still showing a 2.05p per therm increase.  Near futures have switched directions with the latest trade for August now almost a penny below last night’s close at 75.30p.  Freeport LNG is planning to restart one of its three trains this week and will ramp up if that is successful.  The crude oil markets are also flat with Brent last going through at $83.72 a barrel.  The market will look west for the release of the latest U.S. inventory data later today.