UK near curve contracts continued to release risk premium
UK near curve contracts continued to release risk premium during yesterday’s session, however longer dated contract were boosted by a record decline in the pound sterling. October the front month contract sunk by over 65% month on month, settling at 240.78 pence per therm yesterday. Market fundamentals appear healthy, with Norwegian maintenance coming to an end, robust storage levels and clear signs of demand destruction across Europe. Contracts for the remaining months of the year settled 39.81p lower on average, while Winter 22 shed 31.57p to end the day at 455.12 pence per therm. Gas prices along the prompt market drifted lower also, with the Spot and Day ahead down 29.25p and 29.80p respectively.
High spark spreads continued to elevate GB baseload prices
Monday’s session saw no clear sentiment for GB baseload prices, while prices fell modestly lower at the front month allowing the contract to settle at £277.50, there was an uptick for the Winter 22 contract which gained £14.75/MWh to settle at £629.75/MWh. High spark spreads continued to elevate GB baseload prices. EUA’s clawed back some value with the spot now priced at €69.97 per tonne. The market reversed Fridays 6% loss as the European Parliament continued to discuss how allowances will be sold to fund Europe’s REpowerEU recovery plan.
Crude oil prices dropped lower during Monday’s session
Crude oil prices dropped lower during Monday’s session as global recession fears combined with strong US Dollar pressured benchmark contracts. Brent crude front month contract declined to its lowest level since the 11th of January, settling at $84.06 a barrel down $2.09 on the day. The Dollar Index which gauges the dollar’s strength against rival currencies hit a twenty year high during the session, adding further downward momentum to oil prices. Despite the recent downturn in prices, fundamentals remain tight, with OPEC+ falling short of production targets while the cartel also discuss implementing more production cuts.
UK gas market has rebounded this morning
The UK gas market has rebounded this morning, with the front month currently trading at 253.54p, up 12.76 pence per therm. However, liquidity is thin with seasonal contracts yet to trade. UK demand is forecast at 244MCM, with the system currently balanced. Interconnector exports remain robust at 87MCM. Brent crude prices have also opened higher, supply restrictions in the Gulf of Mexico ahead of a hurricane alongside the slight weakness in the US dollar has supported prices this morning. The front month contract is currently trading up $1.03 at $85.09 a barrel.
27 September 2022
