The first real cold snap of the winter provided support to the prompt and near curve of the NBP yesterday

Gas Market

The gas markets responded to the first real test of the winter so far, but supplies held firm and gains were capped as temperatures are forecast to return to normal on Friday. Prompt prices added between 0.50p and 1.38p per therm yesterday as GB gas demand rose to 282mcm, the highest of the current winter so far.  There were times when the system looked to be struggling to match demand but increased imports of 72mcm from Norway along with LNG send out of 86mcm kept the system balanced.  On the curve, December posted the largest gain and was the only contract to add over a penny day-on-day as it went on to close at 83.50p.  The Summer-26 product settled 0.62p up at 74.95p and contracts past this increased by less than a half a penny.

Power Market

The current cold snap is to run until Friday and higher gas prices along with gains to carbon prices supported the baseload curve.  The front month took the lion’s share of the focus for the day and added £1.88/MWh to settle at £84.93/MWh. Remaining contracts covering the winter were an average of £0.70/MWh higher at the close. The EUA carbon market recovered losses made over the previous couple of sessions yesterday. EUA contracts for Dec-26 and Dec-27 added 1.5% or €1.22 per tonne yesterday. Baseload for the Day ahead eased with wind generation expected to pick up on Tuesday’s levels. At the close Wednesday’s price was down £6.80/MWh to £82.90/MWh.

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

Gas prices have opened lower this morning with near months of the NBP down by over a penny. December is trading 1.47p below last nights close having last traded at 82.03p per therm.  Prompt prices are also in retreat with the Day ahead product a half a penny lower at 82.50p.  Reports that Russia’s LNG producer Novatek has offered 30-40% discounts on sanctioned LNG to potential buyers from China have emerged over night. In the crude oil markets, Brent has reversed most of the gains witnessed on Tuesday as the global benchmark has eased by 48 cents to $64.41 a barrel.  The markets are waiting to the U.S. jobs data to see if the Federal Reserve will be more inclined to reduce interest rates next month.