The front month for the NBP, December, settled 1.65p per therm lower at 110.78p yesterday

Gas Market

Weaker gas prices across Europe weighed on the NBP near curve and prompt yesterday.  The front month for the NBP curve traded to a low of 108.00p per therm but failed to hold at that level and prices recovered through the afternoon session as December settled at 110.78p which is a decline of 1.65p day-on-day.  Temperatures for Northern Europe were revised higher for next week and led to the softer prompt and near curve prices early on however, the prolonged spell of lower renewables required storage gas reserves to balance the GB gas system and limited losses on the day.  Prompt prices had traded in negative territory for much of the session, but the Spot settled 0.45p higher while the Day ahead product eased by half a penny.

Power Market

GB baseload futures softened on Wednesday as carbon and gas declined.  Carbon EUAs for contracts out to 2026 were over 1.0% or 74 cent per tonne lower at the close of play yesterday. The front month for baseload power was the biggest loser of the day easing by £1.58/MWh to settle at £90.38/MWh.  Further out, the Summer-25 contract closed at £79.13/MWh, down £1.13/MWh. An increase in the forecast for wind generation weighed on the prompt yesterday.  Baseload for the Day ahead settled at its highest point in almost 12-months on Tuesday but eased by £6.31/MWh to £107.57/MWh yesterday.  

Oil Market

Hopes of a further interest rate cut from the U.S. Fed in December held off pressure from a strong dollar and bearish demand yesterday as Brent settled 39 cents up at $72.28 a barrel.  The greenback has been bullish since Donald Trump’s re-election has been confirmed last week and a strong dollar makes oil more expensive to holders of other currencies.  OPEC+ lowered their forecasts for global oil demand growth for the remainder of 2024 and for 2025 earlier in the week and the International Energy Agency (IEA) is expected to give further details on oil supply and demand in their latest monthly oil report which is due on Thursday. Jerome Powell is expected to give some insights on where the U.S. Federal Reserve stand tomorrow, a further cut in U.S. interest rates would leave borrowers more spending power and increases oil demand.  

Markets this morning

The gas markets have opened with sharp increases this morning, but the front month last traded 1.50p per therm below the morning high of 115.95p.  Prices opened higher on the back of news that Austria’s OMV intend to stop payment to Gazprom in order to recover damages won in arbitration yesterday.  The concern for the market is that gas supplies from Russia may be cut in response but this has always been expected. The Austrian energy company in their statement say measures have been put in place to cover any lost supplies for its customer base.  Crude oil prices have traded flat this morning while carbon EUAs have opened higher in response to the gains in gas prices.