A flat close for NBP futures on Tuesday after a subdued afternoon session

Gas Market

  After opening weaker, NBP futures recovered through the morning, and the front months oscillated between losses and gains as the curve wrestled to find a direction. Prices continued to move sideways through the afternoon as it appeared many traders may have headed off for their Christmas lunch before breaking up for the festive period. At the close, the front months were within +/- 0.15p of Monday’s settlement with January flat at 73.12p per therm.  A revision to wind forecasts may see generation fall below the seasonal norm but the ramping down of large industry load for the holidays should provide some comfort to the GB gas system and this was reflected in the balance of week product which declined by close to a penny yesterday. The latest forecast also revised temperatures a touch higher for the start of the new year and are now expected to be above the seasonal norm.  

Power Market

  GB baseload futures were marked higher on Tuesday as power futures on the continent rose while carbon prices returned to multi-month highs. The front month for the curve, January, settled £0.42/MWh down at £84.55/MWh while contracts from next summer out averaged gains of £0.70/MWh. Carbon EUAs hit a 28-month high yesterday as contracts out to Dec-28 settled an average of €0.59/ tonne higher on increased investor buying. A lower wind forecast would normally be bullish for the prompt, however, this was countered by the expected lower demand as industrial load ramps down for the Christmas break. Baseload for the Day ahead settled 9.1% or £7.20/MWh lower at £72.75/MWh yesterday. Wind speeds are expected to fall from Christmas day.    

Oil Market

    Brent posted its fifth consecutive increase on Tuesday as the market continues to factor in supply risk premium. Albeit, yesterday’s gain was modest at 31 cents, the global benchmark has risen by $3.46 a barrel over the last five-days. This is mainly due to rising geopolitical concerns as the U.S. threatens to disrupt supplies from Venezuela.  It is believed that storage facilities in Venezuela are close to capacity so any blockade preventing exports could mean the country may have to curb production. As the war between Russia and Ukraine continues, latest reports show Ukraine is targeting Russia’s shadow-fleet of oil tankers attempting to dodge sanctions which is also adding to supply concerns. Initial results for the third quarter in the world’s largest oil consumer show consumer spending increased which is likely to boost GDP for the quarter.  

Markets this morning

NBP futures have opened higher this morning with the front month adding 1.43p to last trade at 74.55p per therm. The summer contract is just over a penny higher in early trading on this shortened session before the Christmas break. The Spot and Day ahead have not concluded a trade so far but a short gas system is likely to provide support.  Crude oil prices are slightly up with Brent last exchanging at $62.43 a barrel.   From everyone at Kore Energy we’d like to wish you a very Merry Christmas!