The near curve of the NBP responded to the weak fundamentals yesterday

Gas Market

On Thursday we witnessed the near curve of the NBP soften for the seventh out of the last eight sessions as ample supplies and mild temperatures keep the balance tipped towards the bears. The Spot and Day ahead products moved in the opposing direction yesterday responding to issues at the South Hook Terminal which left the GB gas system with a deficit yesterday. Temperatures are forecast to return to the norm or slightly below for the weekend which should turn up heating demand but reports that LNG cargoes are due at UK ports in the back half of the month kept a lid on the gains. The Day ahead contract finished 0.65p per therm higher yesterday and the Spot added 5.50p while the Balance of month closed 1.50p lower. On the curve, December threatened to fall below the 80.00p mark but settled at 80.03p, down 1.22p day-on-day.

Power Market

GB baseload futures reversed most of the gains recorded over the previous two-sessions yesterday as lower gas and carbon weighed. The December contract settled £0.63/MWh down at £81.00/MWh while Summer-26 closed at £70.50/MWh, down £0.25/MWh. Temperatures are set to increase over the coming days while wind generation is also forecast to drop which gave a lift to the prompt yesterday.  The Day ahead added £3.58/MWh or 5.5% to settled at £69.00/MWh. Carbon prices fluctuated between gains and losses yesterday having climbed near 10-month highs in the previous session. At the close, the sellers won out, and European Allowances fell by 0.73% or 61 cent per tonne on average.

Oil Market

After Wednesday’s sharp declines, crude oil prices recovered a little yesterday as the markets expect the recent sanctions on Russia to kick in and disrupt oil supplies from Russia. The U.S. sanctions on Lukoil announced last month ban transactions with Russia’s top oil company from next Friday which should diminish its oil exports.  In the U.S. there was bearish news from the Energy Information Administration, with American crude oil stocks climbing by 6.4m barrels to 427.6 million barrels over the previous week. However, with the slow return of the U.S. government, demand is expected to pick up which could dent reserves over the coming weeks. The January contract for Brent settled 30 cents up at $63.01 a barrel.

Markets this morning

The U.S. Senate have agreed to advance a bill which could end the federal shutdown and the crude oil markets have responded positively this morning.  Brent is trading 51 cents up at $64.14 a barrel for the January contract while WTI for December delivery has added 56 cents to last trade at $60.31 a barrel.  Closer to home, the gas markets are moving in the opposing direction with December for the NBP down 0.15p to 81.00p per therm while the Summer-26 contract last exchanged at 74.70p, down 0.38p.  The gas system is operating with a strong surplus this morning as demand remains weak at just over 200mcm. LNG send out is close to 60mcm while imports from Norway through the Langeled line are at 66mcm.