Another volatile session was witnessed on Monday as NBP futures flipped from losses to gains as fears of an escalation in the war in Ukraine rose

 

Gas Market

Gas flows from Russia continued over the weekend and on Monday despite the Austrian energy supplier, OMV, receiving notice of a cessation of supply from Gazprom. NBP futures opened lower to start the week, however, the morning’s opening declines of over 3.00p per therm were reversed later in the session.  News that the U.S. was to provide longer range missiles to Ukraine raised fears of an escalation in the war with Russia as the conflict clocks up 1,000 days on Tuesday.  At the close, near months for the NBP were around 1.20p higher with December settling at 118.68p.  Cooler temperatures and a short gas system saw the Spot gain 3.55p yesterday while the Day ahead product added 1.15p. The recent spike in prices in Europe has made it more attractive for LNG deliveries and latest data shows up to five tankers are bound for UK ports by end of month.

Power Market

The power market remained volatile on Monday with early losses to NBP gas futures switching to gains while higher carbon EUAs also provided support. The front month, December, posted the largest gain of the day, adding £4.38/MWh to settle at £100.13/MWh. In contrast, gains from next summer out were less that a pound a megawatt.  Baseload for the Day ahead eased as wind is expected to pick up before falling back later in the week. There were surprise gains to carbon EUAs yesterday after the latest auction results spurred on buying activity for EU allowances. Contracts out to 2026 rose by over 3.25% or €2.25 per tonne on average.  UKAs posted minor losses on the day.  

Oil Market

  Rising tensions in Ukraine along with a power outage at Norway’s largest oilfield lifted crude oil prices yesterday.  Brent settled $2.26 a barrel higher and posted its largest one-day gain in six-weeks after news that the U.S. were to supply longer range missiles to Ukraine. Fears of an escalation had already increased when Russia employed troops from North Korea to beef up its defence in the Kursk region.  A power failure at the Johan Sverdrup oilfield caused the platform to shut down yesterday and it’s not yet known when production will resume. The maximum capacity of the North Sea plant is 756,000 barrels per day, and it accounts for around a third of Norway’s oil production.  

Markets this morning

The Johan Sverdrup oilfield has recommenced after yesterday’s outage and production is expected to ramp up over the day.  Brent has eased a touch but fears of an escalation in the Russian Ukraine war have limited losses after reports that the Russian PM signed an updated nuclear doctrine in response to the U.S. approving long range missile use by Ukraine. Like yesterday, NBP futures opened softer this morning with December trading down to 116.97p per therm, however latest exchanges for contracts at the front of the curve have seen the early declines eroded. December last traded flat at 118.65p per therm. GB gas demand is pitched at 274mcm and supplies are long with LNG send out nominated at 77mcm for today.