Crude oil prices were lifted by the latest round of U.S. economic data yesterday

Gas Market

The NBP recovered Wednesday’s losses during yesterday’s session as concerns over Russian gas supplies buoyed European gas prices. The markets have been inflated since the end of July due to geopolitical risk with the war in Gaza threatening to expand while recently Ukraine forces have taken the conflict into the Kursk region of Russia which has posed a risk to gas supplies to Europe.  Also looming on the horizon is a busy maintenance program scheduled to start in September for many of Norway’s key plants which supply gas to Europe and the UK. While the near curve of the NBP averaged gains of 1.30p yesterday, the prompt moved in the opposing direction on comfortable supplies.  The Day ahead eased by 0.45p yesterday but the Balance of month contract shed 3.15p to close at 83.05p.

Power Market

An uptick in GB gas prices along with higher carbon provided direction for the baseload curve yesterday.  The September contract added £1.50/MWh over the session and settled at £81.00/MWh.  Winter-2024 was marked up by £1.15/MWh while gains to contracts further out diminished.  In the carbon markets, early losses were reversed as EUAs out to Dec 2026 settled higher by around 0.5% or 37 cent per tonne. Wind forecasts dropped for Friday which lent support to the Day ahead product however, forecasts remain strong for the week ahead.  Wind generation exceeded 10.0GW on Thursday but will fall to around 5.0GW before exceeding seasonal norms again next week.

Oil Market

The crude oil markets drew support from the latest positive data from the U.S. yesterday and Brent closed $1.28 a barrel up. Retail sales in the world’s largest economy were higher than expected for July.  An increase of 1.0% was well above the expected 0.3% increase and a big improvement on June’s 0.2% decline.  The numbers claiming unemployment benefit for July increased but were below anticipated levels. This latest economic data points to a soft landing for the U.S. economy and again raised hopes of an interest rate cut next month which would boost oil demand. Geopolitical risk lingers with fears of an Iranian retaliation still a concern however ceasefire talks are to continue in Qatar on Friday.

Markets this morning

GB gas demand is pitched at 16mcm for today, a little higher than recent days due to the requirement of gas fired generators to compensate for reduced wind input.  The system is showing a minor deficit and is likely to support the Spot price which has yet to trade.  NBP futures opened a little firmer, but that early premium has been unwound and near months along with the front season have moved into negative territory. September, the front month, is almost a penny down at 94.66p while the Winter has gone through at 110.55p which is 0.61p below last night’s close. Brent is also demonstrating weakness in early trading with the latest exchange at $80.12 a barrel.