Gas Market
NBP futures opened sharply on Monday with a hangover from the weekend’s coverage of the UK’s storage position fuelling the market. Storage levels for the UK have not risen above 66% of capacity (approx. 10TWh) since the summer so Centrica’s concerns when storage is around 50% may be seen as an attempt at market manipulation after prices had fallen. Europe’s gas storage capacity is close to 1,150TWh and is currently at 65.9% fullness which is down on this time last year but still a healthy position for the current winter. Temperatures for Europe from next week were revised lower and this coupled with reports of an unsuccessful Ukraine drone attack on the Turkstream pipeline from Russia boosted prices later. This gas line runs under the Black Sea to Turkey and enters Europe in Bulgaria to supply Hungary. At the close, February was 8.43p per therm higher at 121.50p while the summer contract closed at 118.61p, up 7.86p.
Power Market
GB baseload power futures garnered support from higher gas and carbon yesterday. The front month, February, was boosted by £6.40/MWh and settled at £99.65/MWh. A little further out the curve, the Summer-25 contract was marked higher by £5.07/MWh to £89.23/MWh. European carbon allowances were an average of 2.6% or €2.03 per tonne higher at the close and the Spot settled at €74.50 per tonne.
Baseload for the Day ahead increased on Monday on the back on movement in the counterpart on the NBP prompt and lower wind forecasts. The price for Tuesday was up 27.2% or £24.85/MWh as wind generation is forecast to fall by around 25% to around 12.0GW.
Oil Market
Brent settled at its highest point since mid-August yesterday as expectations that fresh U.S. sanctions will tighten supplies as exports from Russia to be hit. The U.S. treasury has imposed fresh sanctions to target Gazprom Neft, the oil producer, as well as 183 vessels shipping oil from Russia which will force China and India to look to the Middle East, Africa and the Americas for alternative supplies. The vessels listed under the new sanctions have transported an estimated 1.7m barrels per day during 2024 or around 25% of Russia’s exports. Limiting the gains to crude oil prices yesterday was a strong dollar as the greenback reached a two-year high against a basket of currencies. Brent settled the day $1.25 a barrel higher at $81.01 a barrel, bringing the gain for the last three sessions to $4.85 a barrel.
Markets this morning
NBP futures opened softer this morning with up to 1.50p being eroded in early exchanges. However, supply concerns persist, and the early losses have been reversed for the most part with February a half a penny up on last night’s close on the last trade. The Summer-25 contract is 0.60p down at 118.00p but edging higher with each trade. Prompt prices are down with the Day ahead showing a 1.80p decline so far. The GB gas system is in better shape this morning and the system is forecast 8mcm long against the demand of 296mcm. Brent has eased this morning, and the March contract has dropped back to $80.70 a barrel as shipping rates have increased following the latest round of U.S. sanctions on Russia.
14 January 2025
