The Brent crude contract bounced back strongly during yesterday’s session

Gas market was extremely slow to start trading yesterday

Following the unprecedented gains in the previous session the gas market was extremely slow to start trading yesterday.  Precious few trades went through in the first part of the session as it appeared that participants were taking stock of the huge premiums in forward positions.  The market did begin to release a modest amount of premium with some apparently illogical bid/offer spreads shoring up the market at various stages. Prices for the September contract did fall to a low of 451.00p/therm, down 75.00p but recovered during the afternoon index window.  This contract eventually settled at 494.36p/therm, just 32.00p down on the day.  The Winter 2022 contract was not that heavily traded and settled at 658.50/therm, down by 18.23p.

 GB baseload futures at the front of the baseload curve eased lower

The GB baseload futures at the front of the baseload curve eased lower although losses did not fully represent the falls in UK NBP gas costs.  The September contract fell by £4.95 while October & November fell by £21.00 & £31.00 respectively. Declines in overall baseload prices were pared by gains in forward spark spreads. Clean spark spread for the front Winter increased by £40.00 to close at £211.35/MWh.  On the power prompt prices remain extremely elevated with little movement day on day.  Day ahead power for today settled at £503.90/MWh.

 Crude oil markets failed to fall further

Crude oil markets failed to fall further having broken a three-session losing streak on Monday, albeit with a small decline.  The Brent crude contract bounced back strongly during yesterday’s session with the contract hitting a high of just above the $100 a barrel mark.  The bounce in the market came about after it emerged that the OPEC plus Group are considering the prospect of reducing production.  OPEC’s main player, Saudi Arabia, floated the idea that it would curb production in order to stabilise the market.  This can be read as the Saudis wanting wholesale prices to increase and this was achieved as crude oil prices settled at $100.22 a barrel, up by $3.74 on the day.

Gas prompt prices are in line with where they finished yesterday

Having traded lower in the earlier part of the session the front month September contract is priced more or less flat to last night’s close.  There have been some further losses on the other near-term contracts but with few trades going through thus far it is difficult to determine the direction of the market this morning. The front Winter has seen some trades go through at 663.00p, up by 4.50p from last night’s close. On the gas prompt prices are in line with where they finished yesterday. Following the return above a $100 a barrel crude oil markets continue to push higher with Brent crude priced at $101.29 a barrel, up by $1.07.  

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