A strong dollar and economic fears continue to weigh on oil prices

The UK gas market reversed the gains of the previous sessions

The UK gas market reversed the gains of the previous sessions falling considerably across the curve yesterday as the market gave up premium built in following the discovery of leaks on the Nord Stream pipelines. These facilities have not been delivering gas to Western Europe and it is apparent market concerns surrounding them has ebbed as the news of a fourth leak failed to result in any rallying of the prices on Thursday. The front month of October experienced sustained pressure throughout the session and retreated 20% or 65.76p to settle at 255.91p/therm. Pressure on the Winter 2022 was equally apparent as it tumbled 63.35p to end the day at 477.80p/therm.

GB baseload power market reversed gains from the previous two sessions

The GB baseload power market reversed gains from the previous two sessions following a sell off on the UK NBP gas market. The October contract was hardest hit as it declined by £54.50 to close at £270.00/MWh. The outlier on the forward curve was December 2022 which went against the grain as it firmed by £22.000 to close at £734.50/MWh. The upward movement on the December contract was once again a function of higher spark spread as the full Winter 20223 spark spread added £28.00 to close £248.94/MWh. The day ahead contract continued to ease and settled at £185.00/MWh as £97.00 fell out of today’s price.

 Brent crude prices released some of the gains of the previous sessions

Brent crude prices released some of the gains of the previous sessions yesterday ending the day marginally down across the curve. A strong dollar and economic fears continue to weigh on prices even amid growing expectation that the OPEC+ will approve a production cut at its meeting next Wednesday. Furthermore, the impact of Hurricane Ian continues to be felt in the Gulf of Mexico region, an area accounting for 15% of American crude oil production. Brent crude for a November delivery fell by $0.83 to settle at $88.49 a barrel.

Today marks the first day of trading of the new front month November contract

Today marks the first day of trading of the new front month November contract.  In addition, the Winter 2022 contract has now expired as a fully tradable period.  November is priced on ICE at 387.00p/therm, down by 18.91p from last night’s close but at a premium of 131.00p above where the October contract finally settled.  The market is slow to get going on other periods which is not surprising given the large sell off on contracts yesterday. Gas demand in the UK is forecast at 230MCM today and system is running short by 14MCM at the moment.  This has put some pressure on the gas prompt where the spot has increased to 205.00p, up by 7.95p.  

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