Risk premium added for potential LNG disruption in the Pacific was quickly unwound on Thursday

Gas Market  

The early pattern of oscillation between gains and losses for near month futures on the NBP curve continued through the session as the market wrestled to find direction on Wednesday. It was the last day for buying the front month, August, on the ICE platform and the contract ended the day a penny higher at 83.67p per therm.  The more heavily traded September contract added 0.91p to close at 86.33p.  Concerns were raised briefly early on, following reports of an 8.8 earthquake off the East coast of Russia which triggered tsunami alarms for Japan and the U.S. Pacific coasts. Risk premium added for potential LNG disruption in the Pacific was quickly unwound. Unplanned outages at Karsto underpinned prompt prices on the continent but the Spot for the NBP settled flat at 83.00p.

Power Market

Early volatility on the NBP curve spilled into trading for GB baseload futures before a downturn in carbon prices left contracts mixed for the day.  On its penultimate day for trading August gained £0.38/MWh while the incoming front month, September declined by £0.28/MWh.  The Winter contract was assessed flat at the close at £86.63/MWh. French power prices responded to higher temperatures forecast for August and potential curtailment of the nuclear fleet. Baseload for the Day ahead was marginally down at the close with wind generation forecast just above the average levels seen for the last week.  Wind is forecast to meet around 19.6% of GB demand on Thursday.

Oil Market

Crude oil prices increased for a third session in a row yesterday as the market reacted to President Trumps threat to impose tariffs on countries purchasing Russian oil.  Earlier in the week, he turned up the heat on Russia giving President Putin a tighter deadline to end the war with Ukraine. He has proposed a 25% trade tariff on imports from India from 01-Aug and has threatened China with high tariffs if they keep buying from Russia although it is unlikely that China will comply, India has signalled it would do so. In response, the September contract for Brent has gained $4.80 a barrel over the last three days.  Meanwhile, the latest inventory data from the Energy Information Administration showed U.S. crude oil stocks increased by 7.7m barrels last week while gasoline reserves were down by 2.7m barrels.

Markets This Morning

Yesterday’s report of a build in U.S. crude oil stocks from the EIA has stalled the rally in crude oil prices this morning. Brent for September is down 27 cents to $72.97 a barrel while the October contract which will take on front month status next week last traded at $72.19 a barrel.  In the gas markets, early minor gains to the front months have been reversed and September, the new front month for the NBP is down 0.18p to 86.15p per therm. The Winter contract is showing a decline of 0.38p with the latest trade going through at 94.25p. The prompt screen is still showing last night’s close, and the GB gas system is forecast 12mcm long against a demand of 163mcm for today.