On Tuesday we witnessed near NBP futures rise to almost 3.00p above Monday’s close, however, most of the gains were eroded by the close

Gas Market

On Tuesday we witnessed near NBP futures rise to almost 3.00p above Monday’s close, however, most of the gains were eroded by the close.  Earlier in the session, the volatility continued amid concerns over the imminent end to the Russia-Ukraine transit deal while outages at Karsto and Kollsnes added further support. The front month settled just 0.18p per therm higher at 114.29p on the shortened trading day ahead of the Christmas Holiday. Further out the curve, gains were generally below a half a penny. As expected, demand was subdued due to holiday shutdowns while the unseasonably mild temperatures curbed heating load.  The Spot and Day ahead contracts were up a penny and 0.15p respectively while poor wind forecasts saw the balance of month product rise by 2.00p.  

Power Market

Liquidity in the GB baseload power market was thin on Christmas Eve due to the shortened trading session and the late reversal witnessed on the NBP curve came a little late to impact baseload futures.  The January contract settled with a gain of £1.70/MWh leaving the front month to close at £100.50/MWh.  Baseload for the Day ahead settled higher on the back of forecasts for reduced wind generation for the remainder of the year. Carbon prices eased going into the holidays and again due to the shortened trading day exchanges on the day were thin.  The Spot for European Allowances fell by 24 cent per tonne to €67.45.  

Oil Market

Brent for February delivery added almost a dollar a barrel on Tuesday as prices were buoyed by expectations of a drop in U.S. crude oil stocks while hopes of a pump in demand in China following the government’s latest stimulus plan also propped up prices.  The world’s largest crude oil importer is to issue the equivalent of $411b worth of treasury bonds in 2025 in order to reboot its economy.  The latest figures from the American Petroleum Institute show a large decline in U.S. crude oil reserves for last week, however, official government data will not be released until Friday this week.  

Markets this morning

The gas markets have opened in bullish form this morning with January, the front month for the NBP curve, peaking over 6.00p per therm higher at 120.40p.  The latest trade was done below that at 119.00p but all near contracts are over 4.00p above Tuesday’s close.  The expiry of the Russia-Ukraine transit deal on 01-January continues to provide support.  The GB gas system is short by 23mcm this morning and the National Grid forecasts demand at 237mcm which is likely to influence prompt market when it gets going after the break for Christmas. Crude oil prices are flat this morning with trading expected to remain subdued today.