UK gas prices ease on Friday, however prices remain high

 After a bullish week for UK natural gas futures, the NBP curve eased

After a bullish week for UK natural gas futures, the NBP curve eased on Friday.  Seasonal contracts had posted record high after record high earlier in the week but were down by around 10.00p early on Friday.  However, the supply concerns have not gone away and a short UK gas system which supported the prompt on Friday morning fed into the curve leaving near futures to close down by an average of 6.10p. The summer and winter contracts for 2023 eased marginally but added around 86.00p per therm over the week as the differential to the front winter narrowed. Imports from Norway will be curtailed to the end of August due to planned maintenance, but LNG supplies remain robust.

Baseload futures tracked the NBP gas market

The higher NBP prompt provided support to the day ahead baseload contract on Friday as the product settled 3.7% or £11.39/MWh higher.  The Heysham 1 nuclear reactor is to be maintained from 14-Aug and will be off for two weeks, according to EDF.  Wind generation remained around 2.1GW on Friday and is forecast lower for Monday. GB baseload futures tracked the near NBP curve on Friday and settled lower for the most part. September shed £3.00/MWh to close at £362.50/MWh, while the winter contract closed at £590.00/MWh, down £7.50/MWh.

 Brent crude oil prices shed value on Friday

Crude oil prices eased back on Friday after two sessions of gains with news that the disruption to U.S. supplies in the Gulf of Mexico would be short term.  Production at three offshore rigs was halted due to a damaged oil pipe which curtailed production by up to 410,000 barrels per day but repairs were expected to be concluded by late Friday.  Earlier in the week, prices rose on the back of a reforecast of higher demand from the International Energy Agency as fuel switching away from more expensive gas is likely to add an increase to oil consumption.  Brent for October delivery, settled at $98.15 a barrel, down $1.45 a barrel on the day but up $3.23 over the week.

NBP futures are up from Friday’s close

Near futures have opened firmer by up to 10.00p today but latest trades have seen the front two months trade off their morning highs.  September is 5.45p up at 401.25p and October last traded at 446.29p, up 6.50p on Friday’s close.  Contracts past this have yet to trade as the bid and offer spreads for the seasonal contracts are wide.  Likewise for the prompt, there are no deals on the board, but the GB gas system is showing a surplus this morning as demand for the day is down at 198MCM.  The Brent October contract has shed over three dollars a barrel in early trading, with poor economic data from China reviving concerns of slowing demand in the world’s second largest oil consumer. Read more carbon market news in our Insights section.