Speculation that the U.S. and China were preparing to enter trade talks fuelled the energy markets on Friday

Gas Market

  On Friday we witnessed NBP futures rebound on speculation that the U.S. and China were preparing for trade talks. The U.S. administration have increased tariffs on Chinese goods to 145% and trade tensions have weighed on gas prices due to concerns of demand destruction.  The June contract for the NBP declined by 25.14p per therm or 24.4% during April and recovered 2.90p on Friday. The gains towards the end of the week put the contract in positive territory for the previous five days. With the EU due to agree its strategy for phasing out the importing of Russian energy later in the week, Germany moved early to reduce its gas in storage target down from 90% to 70% for the 01-November, the ministerial decree does not need EU parliamentary approval.  

Power Market

The uplift in prices on the NBP curve propped up GB baseload futures on Friday. The front month, June, added £2.50/MWh to settle at £73.50/MWh, while the Winter-25 contract was £2.05/MWh higher at the close.  Cabon EUAs continued to add premium due to increased buying activity and the Spot settled at a fresh one-month high at €67.76 per tonne, this was a gain of €1.65 day-on-day. UKAs also increased by 4.0% on average. Forecasts for wind generation remained subdued for the week ahead and prompt prices reacted to gains on the NBP.  Baseload for the Day ahead added £3.16/MWh or 4.2% in Friday’s session.  Wind generation is forecast to fall to below 4.0GW.  

Oil Market 

Concerns of oversupply washed through the crude oil markets on Friday ahead of the OPEC+ meeting.  The group pulled their meeting forward to Saturday and have flagged well in advance that they intend to increase production again in June despite weaker prices. Losses on the day were curbed by concerns of a slowdown in crude oil demand growth amid trade tensions.  There was speculation that the U.S. and China were preparing for trade talks after the Chinese Commerce Minister said that they considering an offer for talks from the U.S. administration. However, Trump threatened to impose secondary tariffs on buyers of Iranian crude oil following a breakdown in nuclear negotiations with Iran and with China the largest importer of crude oil from Iran this may have cooled the prospect of trade talks between the two.  

Markets this morning

The gas markets were closed on Monday due to the UK bank holiday, but the crude oil markets were open and the July contract for Brent declined by over a dollar to $60.23 a barrel, a new four-year low for the global benchmark.  The decline came on the back of OPEC+ confirming they will increase output by 411,000 barrels per day in June. Oversupply fears have been tempered this morning with yesterday’s loss being recovered as Brent last traded at $61.91 a barrel. In the gas markets, the front month for the NBP opened lower but has switched tack with the latest exchange going through at 82.70p, up 2.55p.  Prompt prices are also higher in early trading despite the GB gas system operating in balance against demand pitched at 162mcm.