Near NBP months settled with modest gains on Friday

Gas Market  

After a relatively subdued week, very little changed in the gas markets and near futures settled just over a penny higher on Friday. The August contract settled at 79.06p per therm which was towards the lower level of the price range for the front month during July. The low for the contract this year was set at the end of April at 77.25p when the Russian President was calling for a temporary ceasefire with Ukraine. While the war between Russia and Ukraine continues to underpin the market, European gas storage levels are recovering albeit at a measured pace, storage is now above 65% of capacity for the EU. Trade talks between the U.S. and Europe continued and both sides were said to be close to a deal which could deliver more certainty for the markets. Prompt prices posted modest gains on Friday with an unplanned outage at Aldbrough adding some risk premium to the Spot and Day ahead prices.

Power Market

GB baseload futures found support from the increase in gas and carbon on Friday.  Baseload for August climbed by £0.50 to £73.00/MWh which left the contract marginally higher over the week.  The remainder of the near curve moved lower for the week despite recording an increase on Friday. Prompt contracts eased with strong wind forecasts countering upward pressure from the NBP Spot and Day ahead. After a strong rally on Thursday, EU carbon allowances consolidated the gains on Friday despite low volumes being traded.  The Spot for EUAs added 59 cent to close at €70.79 per tonne while contract for 2025 and 2026 added an average of €0.57 to the price for a tonne.

Oil Market

Economic concerns in the U.S. and China weighed on crude oil prices on the final day of trading for the week. Brent settled at its lowest point for three-weeks at €68.44 a barrel.  The September contract fell by 74 cents per barrel which took the weekly fall to 84 cents a barrel and marked a second week of declines for the global benchmark. Orders for U.S. manufactured goods dropped unexpectantly in June which raised concerns of falling demand in the next quarter. Reports that China’s fiscal revenue has eased by 0.3% in the first six-months of the year added to demand concerns on Friday.  Losses were limited by optimism around the trade talks between the U.S. and Europe with both partis believed to be close to an agreement.

Markets This Morning

The news of a trade deal agreement between the US and Europe was welcomed by the markets this morning. It is hoped that the deal will bring more certainty which should boost investment.  NBP natural gas futures increased shortly after opening but have since moved in to reverse gear with the front month down 1.43p per therm at 77.63p. Further along the curve, the Winter-25 contract is around a penny lower at 89.67p while there is low liquidity on contracts past the winter. Crude oil prices have rebounded with Brent almost wiping out all of Friday’s loss and currently exchanging at $69.03 a barrel.  Early trades for the carbon markets are also climbing with the Dec-2025 contract for EUAs up by 53 cent per tonne.