Gas Market
The winter storm Fern continues to engulf North America and is boosting gas prices. The front month for the Henry-Hub gained 70.0% over the last week and was up a further 28.9% on Monday as February closed at 49.64p per therm on increased demand and concerns that the freezing temperatures could impact LNG production. Temperatures in the US are expected to return to seasonal norms next week and this was reflected in March price which increased by 8.0% yesterday to 28.45p per therm. The sharp increases in US gas prices supported the NBP front curve early on with the lead month peaking at 113.00p before falling through the afternoon and eventually settling at 101.64p, down 3.03p day-on-day. March will assume front month status for the NBP at the end of the week and was down 1.30p to 91.79p yesterday while the summer contract gave up 2.48p. On the prompt the Day ahead closed 3.80p down on expected lower demand as wind generation is expected to top 20.0GW on Tuesday.
Power Market
A decline in natural gas futures from late morning saw GB baseload power futures switch tack and settle lower on Monday. February and March were marked £0.46/MWh lower on average yesterday, however, the Summer-26 contract settled £1.88/MWh down at £74.05/MWh having traded in positive territory early on. Forecasts for higher wind generation weighed on the prompt and baseload for the day ahead was down £15.61/MWh.
The carbon markets tracked movement on the NBP gas curve yesterday with early gains giving way to weaker prices later in the session. An earlier auction saw prices fail to reach the spot price and investment funds cashed out profits which added to the downside. Carbon EUAs settled an average of 80 cent per tonne down at the close.
Oil Market
The crude oil markets were steady on Monday and awaited reports of the impact of the winter storm Fern on crude oil production. It was estimated that around 2m barrels of production per day was lost at the weekend due to the Polar air mass moving south, but there are hopes that production at the impacted refineries will return by the end of the week. Tensions in Iran remain high after a senior Iranian representative responded to President Trump sending aircraft carriers to the region and stated any attack on Iran would be treated as an all-out war. The peace talks between Ukraine and Russia continued but the territory issue remains a barrier to progress. Mr Putin wants the Donbas region which is mostly under Russian control at the moment. In the meantime, both sites continue to target the other’s energy infrastructure with drone and missile attacks. Brent settled at $65.59 yesterday, down 29 cents a barrel.
Markets this morning
A similar pattern to yesterday is playing out for the NBP curve as early gains are pared back this morning. The front month for the NBP opened slightly down but immediately rose and peaked at 105.50p per therm. Reports of an outage at the Asgard field late last night may have prompted the higher opening but Gassco expect to have the compressor issue resolved tomorrow. The latest trade for February was at 103.15p per therm, which is up 1.51p for the day. Contracts past the front months are in decline with the Summer-26 contract showing a discount of a half a penny to last night’s close. Crude oil prices have recovered most of yesterday’s losses with Brent last trading at $65.82 a barrel.
