Market opened in a subdued manner on Friday
Following Thursday’s losses on the near curve, the market opened in a subdued manner on Friday morning, down marginally form the previous day’s close. The volatility that has become an ever present in the market was clear again on Friday as intraday trading saw prices climb as high as 365p per therm for front month January, before falling and closing the day at a discount of 3.68p per therm at 345.91p per therm. Further out on the curve, prices were little moved with Summer-23 1.66p lower, and Winter-23 flat. On the prompt the cold weather caused a short system for the majority of the day causing day ahead to gain almost 16p per therm from Thursday, closing at 354.40p. Issues at the processing plant Karsto in Norway removed 9mcm from supply that helped to support prices further.
Prices have fallen dramatically over the week
GB Baseload prices for Q1-23 eased on Friday taking direction from the gas market and improved outlook for Nuclear across the continent and the expectation that wind will show up. It is expected that the UK will continue to export power to the continent, a fact that is helping to keep Q1 prices supressed. Prices have fallen dramatically over the week as value in the spark spread is being eroded. The lack of wind coupled with drop in temperatures impacted dramatically on day ahead baseload prices on Friday with prices up 62%. There is expected supply tightness across the continent that is feeding into prompt power markets as the cold weather increases demand.
Crude oil prices were mixed on Friday
Crude oil prices were mixed on Friday as weak global economic data outweighed fears of supply cuts in Russia and the US. There was concern that the US Federal Reserve would not slow down the pace of the recent interest rate hikes. Impacting on this was a faster than expected acceleration in the US producer price index, suggesting that US CPI will also be higher than expected, and raiding concerns interest rates will need to be increased, helping to curb prices. On the supply side, expected cuts in Russian oil production and their refusal to sell to countries imposing the G7 price cap was a bullish signal for the market, helping to curb the downward trend.
Oil continues to slide
UK gas prices have opened up considerably lower today. Q1-2023 is down approximately 12.00p from Friday’s close. News of the Norwegian processing plant, Karsto, is due to return from unplanned maintenance is helping to suppress prices for the quarter while further out trading has been muted with no trades beyond Q1 at the time of writing. The Artic Blast continues to grip the UK with the system marginally short this morning despite a drop in gas for power demand from Friday’s forecast. Trading on the prompt is thin with no trades completed yet this morning. However, indicative bid and offers point to a softening market with within day bid 25.00p below Friday’s close at 335.00p. Oil continues to slide due to the continued weak economic outlook.
12 December 2022
