Gas Market
The upward trend experienced on the NBP at the end of 2024 continued into the New Year on Thursday. Even though the cessation of Russian gas supplies to Europe via Ukraine from January 1st was widely known for the past year, the event continued to support prices, with the front month contract posting a gain of 3.22p to settle at 125.18p per therm. Since 2023 Russia has supplied circa 6.0% of Europe’s natural gas and it is this volume only that is impacted by end of the Ukraine transit deal. However, this loss of supply is expected to be partially offset by increased flows via Turkey, as well as increased LNG imports. European gas storage levels are currently robust as we head into the second half of winter, at 72.2% fullness. Colder temperatures and below normal wind levels exacerbated yesterday’s upside, with the Day ahead contract increasing by 2.93p day-on-day to close at 124.88p per therm, its highest close since October 2023.
Power Market
For the most part, GB Baseload curve contracts tracked the upward moves seen on the NBP gas market on Thursday. The extent of the gains was mixed, with the new front month contract, February-25, increasing by £0.95/MWh, while March-25 settled up by £2.38/MWh. Below average temperatures and wind power levels for the rest of the week supported the prompt market, with Day ahead increasing by £51.10/MWh to close at £108.11/MWh.
A resumption of somewhat normal activity after the holiday break saw European carbon prices edge up on Thursday. Spot EUA’s were influenced by an increase in TTF gas prices caused by outages in the North Sea, with the contract closing at its highest level since the end of May.
Oil Market
Oil prices rose for a fifth consecutive day on Thursday, with a renewed sense of optimism surrounding the Chinese economy driving the gains. In a New Year’s address President Xi Jinping stated that China would implement more proactive policies to promote growth in 2025, suggesting oil demand levels could be revived. China’s factory activity grew in December, but at a slower pace than expected in the face of concerns over how tariffs proposed by U.S. President-elect Donald Trump will affect the trade outlook. On its first day trading of the new year, the front month Brent contract closed at $75.93 a barrel, up $1.29 day-on-day. Meanwhile, its WTI counterpart rose by $1.41 to settle at $73.13 a barrel.
Markets this morning
The NBP has edged back this morning from yesterday’s highs, with the front month contract last trading at 124.75p per therm, down 0.43p on the previous close. Liquidity on the prompt is once again low, although an undersupplied system could be supportive of the Spot market should trade get going. Temperatures have dropped further today, although a forecasted uptick in temps on Sunday and Monday could alleviate upside on the Day ahead. Wind levels are also expected to be higher on Sunday, which should take some pressure off gas for power demand over the coming days. Crude oil prices are little changed today, with front month Brent last transacting at $75.63 a barrel, down just 30 cents day-on-day.
03 January 2025
