A lower-than-expected draw in U.S. crude oil stocks pressured prices yesterday as Brent slipped by almost a dollar a barrel

Gas Market

Geopolitical risk kept gas prices across Europe propped up on Wednesday while late volatile trading saw NBP futures ease before the close. The near curve settled an average of 0.60p lower after some wide swings in prices in the last hour or two of trading.  Buying activity was centered on the September contract on it’s penultimate day as lead month on the ICE platform while the Winter contract was also heavily traded and settled at 105.09p, down 0.81p. Prompt prices were buoyed by the large-scale maintenance works at several Norwegian plants which has been scheduled to run into September.  Gas flows to Europe and GB are expected to fluctuate over the coming weeks as the works intensifies.  The Spot and Day ahead products added over 2.00p yesterday as the gap to the front of the curve narrowed.  

Power Market

GB baseload power futures settled mixed yesterday as the decline to the NBP curve came too late to impact the front month.  September settled with a gain of £0.85/MWh posting it’s third rise in a row while the Winter-2024 contract eased by £0.38/MWh, leaving the contract flat for the last five-days.  In the carbon markets, early gains to EUAs were reversed as the spot closed 93 cent down at €69.84 per tonne. UKAs held on to the gains and closed around 3.7% higher. Forecasts for lower wind generation lifted the prompt on Wednesday as the Day ahead settled a little higher at £82.76/MWh.  Wind is now expected to fall below the norm at around 5.5GW for next week.  

Oil Market

U.S. crude oil reserves fell by 846,000 over the last week and while the draw in supplies was welcomed, it fell short of expectations and crude oil prices eased for a second day.  The markets had expected the Energy Information Administration to confirm a draw of over 2.2m barrels of crude oil for the week in it’s latest weekly inventory report. Concerns over flagging demand in China also weighed on prices yesterday with stimulus from the government yet to show any improvement. Losses on the day were limited after news that output at several Libyan oil fields has been halted due to disputes within the government over control the central bank and the revenue from oil. Brent for October delivery was marked 90 cents lower at $78.65 a barrel.  

Markets this morning

NBP futures opened firmer this morning with September which is due to expire today rising by a penny over last night’s close.  The market has switched direction, and most contracts have reversed the gains and moved into negative territory with September now almost a half a penny down at 92.35p while the Winter has declined by 0.88p.  There have been no trades agreed on the prompt screen as yet and the gas system is showing a healthy surplus as demand is forecast at 140mcm.  Brent has continued to shed premium this morning with October exchanging 43 cents a barrel below last night’s close.