Kore Energy Daily Market Report – Friday 10th January

Gas Market

Premium continued to be eroded from the front of the NBP curve on Thursday, but the losses were more modest than those witnessed during the previous session.  Having declined by over 4.00p on Wednesday, the front month, February, eased by just over a penny to settle at 112.93p per therm bringing the decline for the last five days to 12.25p.  The current cold snap is forecast to break over the weekend, but the Spot yielded 4.13p while the Day ahead product was 1.15p down despite the forecast for negative temperatures in the double digits for parts of the UK and low wind generation. Gas imports from Norway through the Langeled line were running at full tilt yesterday while UK ports are expecting two LNG deliveries before the weekend.    

Power Market 

The GB baseload curve settled lower for the most part yesterday as near curve contracts eased due to pressure from lower gas prices.  Gains to carbon limited the losses on Thursday and some longer curve contracts were marked higher at the close of play.  The front month, February, fell by £1.38/MWh brought the loss for the week to £10.25/MWh. The Summer-25 product settled £0.45/MWh down at £83.43/MWh. Wind is forecast to fall well below seasonal norms from Friday and UK generation is pitched at just 4.0GW for the day which pushed the Day ahead product to £172.86/MWh, a 61.9% increase from the previous session.      

Oil Market

Brent settled 76 cents a barrel higher on Thursday with support from supply concerns as Russian oil infrastructure is hit in latest Ukraine attack. The recent attack by Ukraine on a Russian oil facility in the Volga region renewed concerns of disruption to European energy infrastructure.  In the U.S., many states are experiencing freezing winter conditions with fresh warnings issued for Virginia to east Texas yesterday.  So far, the refinery region has escaped the bad weather but there could be disruptions to supplies if the storm tracks south. Mr Biden is expected to impose more sanctions on Russia’s economy before he moves out of the White House, previous sanctions have targeted the countries oil industry.  

Markets this morning

The current cold front and low wind generation has GB gas demand for today forecast at 385mcm, and the system is showing a minor deficit of 2mcm this morning.  Prompt prices are flat but NBP futures have weakened with the front month, February, down 3.40p at 109.53p per therm.  Contracts out to the summer are all down significantly with the Summer-25 contract last going though at 107.60p, almost 2.50p lower.  With the current cold snap across northern Europe expected to break at the weekend, premium added for the loss of Russian gas continues to be unwound. Crude oil prices remain bullish with Brent gaining $1.83 a barrel in early exchanges as the market weighs up higher demand and supply concerns.