The front month for Brent fell below the 50-day average to $74.29 a barrel

Gas Market

Lower wind generation levels coupled with cooler temperatures continued to place a draw on gas reserves across Europe yesterday and pushed gas prices higher. It was a volatile session on the NBP curve with front months peaking over 5.00p above the previous close before easing back through the afternoon session. The March contract went on to settle almost 3.00p below the intra-day high at 133.19p per therm.  Prompt prices increased over the day despite a robust send out from LNG after seven cargoes were landed at UK ports over the last week.  Earlier in the week the Ukraine President said in an interview that he is ready to sit down with his opposite number from Russia to begin peace talks. Donald Trump has said he wants peace in the region so it will be interesting to see if he can get talks started as the third anniversary of the Russian invasion approaches.  

Power Market

GB baseload futures tracked movement across the NBP curve yesterday as the curve settled higher for a second day in a row.  Gains were evenly spread across contracts out to next summer with the average increase being £1.75/MWh.  March, the front month settled at £108.65/MWh while the Summer-25 contract was assessed at £100.03/MWh.  Carbon EUAs tracked movement of gas prices and the Dec-25 contract settled 66 cent up yesterday. Forecasts for wind generation to increase through Friday in the UK weighed on the Day ahead product on Thursday. Wind could overtake gas fired generators and move to the top of generation stack from tomorrow.    

Oil Market

Earlier gains to crude oil prices were reversed through the afternoon as Trump renewed his promise to increase U.S. production. Brent for April delivery settled 32 cents down at the close while the U.S. benchmark, West Texas Intermediate, closed at $70.61, down 42 cents a barrel for March. Later in the session the new U.S. administration announced a slew of new sanctions targeting Iran’s oil exports. As China is the main destination for Iranian crude oil exports, the latest action from Trump is likely to exacerbate the growing commercial tension between the two countries.  Reserves of U.S. crude oil increased by 8.7m barrels last week, bringing stocks to 423.8m barrels which is around 5% below the five-year average according to the Energy Information Administration.  

Markets this morning

GB gas demand is slightly lower today as wind generation steps up and displaces gas fired units from the power stack.  Supplies are forecast to run 20mcm long as LNG send out remains around 80mcm for today.  In the gas markets, the spot for the NBP is flat, however, the Day ahead product for Monday has added 2.05p per therm.  Near months on the NBP curve opened around 2.00p lower but the latest trade for March was less than a penny above last night’s close at 134.15p.  Crude oil prices have firmed overnight following the latest U.S. sanctions targeting Iran’s oil exports and Brent last exchanged at $74.93 a barrel.