Significant gains were seen on the NBP prompt market on Friday ahead of this weeks’ cold spell

Gas Market

Significant gains were seen on the NBP prompt market on Friday ahead of this weeks’ cold spell. The lower temperatures were set to drive up demand for heating, while the more settled conditions supported the outlook for gas-for-power demand. As a result of the tighter conditions, the Day ahead contract jumped by 11.45p day-on-day, or 16.9%, to close at 79.30p per therm. The prompts’ support filtered into the curve, with the near months gaining an average of 2.15p per therm day-on-day. Further out along the curve, gains were more modest, with the Winter 26 contract posting a 0.84p increase to settle at 81.86p per therm. European storage levels remain healthy at 82.02% full, just 9.25% lower than this time last year.

Power Market

Following the gains exhibited on the NBP gas curve, GB baseload futures products retraced much of their previous days’ losses on Friday. The front month contract increased by £1.50/MWh day-on-day to settle at £82.50/MWh. Lower wind output and colder temperatures forecast for today lifted the prompt market also, with the Day ahead contract increasing by £0.45 day-on-day to settle at £69.44/MWh. Despite day-on-day declines, European carbon prices recorded their third weekly increase on Friday. Dec 25 European Allowances shed a modest €0.32 day-on-day to close the week at €80.97 a tonne. Meanwhile, UK Allowances for Dec 25 declined by £1.25 to settle at £57.03 a tonne.

Oil Market

Heightened geopolitical tensions between Russia and Ukraine supported oil markets on Friday. Supply concerns were stoked following the halt of Russian oil exports from the port of Novorossiisk following a Ukrainian drone attack that hit the depot. With the intensity of these occurrences increasing, concerns were focused on whether or not further attacks could cause lasting disruption. The market also remained tentative to the impact of Western sanctions on Russian oil supply and trade flows. The front month Brent contract gained 2.2% by the close to settle at $64.39 a barrel. Meanwhile, the West Texas Intermediate (WTI) contract for December delivery closed at $60.09 a barrel, an increase of $1.40 day-on-day.

Markets this morning

Following Friday’s gains, the NBP curve is trading flat this morning. The front month contract last went through at 82.57p per therm, a modest 0.18p gain on its’ previous close. Meanwhile, the prompt market continues to build on previous gains, supported by a rise in gas demand levels and updated forecasts suggesting that the cold spell will continue into next week. The Day ahead contract last went through at 82.10p per therm, an increase of 2.80p on Friday’s close. Crude oil prices are stable this morning following the resumption of oil exports at the Novorossiisk export hub following last weeks’ drone attack. The front month Brent contract was last observed at $64.27 a barrel, down just 12 cents day-on-day.