UK gas prices continued to unravel on Thursday
UK gas prices continued to unravel on Thursday, however losses were marginal compared to the previous session. The selloff seen in recent days was maintained across curve ahead of the Christmas break, with the front month contract January dipping to a low of 226.41p per therm before settling at 226.90 pence, a price not seen since the early June. In the prompt market the Day ahead contract dipped to below the 200.00p barrier for the first time since late November, to add some additional context, the Day ahead settled at 423.20p per therm on the same day last year. Mild weather coupled with healthy near term fundamentals has created a significant downturn in UK gas prices this week, with the bellwether contract Summer 23 loses 94.61p over the last five days of trading.
Bearish weather has supported the down turn in near curve prices
The weekly downward trend in GB baseload future contracts continued on Thursday, with losses across the curve. The front month took the brunt of the downward trend, down £12.50/MWh at £253.25/MWh while further along the curve losses were marginal. Bearish weather has supported the down turn in near curve prices with gas prices making significant losses throughout the week.GB baseload for day ahead delivery ended yesterday’s session at £203.87/MWh, down £1.13/MWh on the day. GB baseload day ahead has averaged at £309.123/MWh in December.
The oil market has failed to shrug off economic worries
Global oil markets continued their upward trend on Thursday for the majority of the day, however, in the late afternoon prices shifted lower and the Brent Crude front month settling $1.22 lower at $80.98 a barrel. The front month contract has traded at $80.50 a barrel on average in December compared to $91.02 in November. Weather fundamentals have influenced the recent trend, as the US prepares for a significant winter storm which has the potential to impact an already tight system. The oil market has failed to shrugged off economic worries and China’s reopening following strong lockdowns will play a major factor as its the world’s second largest oil consuming nation. The US West Texas Intermediate front month settled at $77.49 down 1 percent on the day.
Gas prices have once again opened in negative territory
On the last day of trading before the Christmas break, UK gas prices have once again opened in negative territory. The front month contract last traded at 207.75 pence per therm, a price not seen since before the Russian invasion of Ukraine. The front quarter has extended its losses also, last trading at 213.80 pence per therm. Despite the UK gas system being 10MCM under supplied this morning the prompt market remains muted. In the wider energy complex, momentum is moving in the opposite direction with Brent crude front month last trading at $82.52 up $1.54 a barrel while EUA carbon Dec 23 contract is trading at €89.40 a tonne.
23 December 2022
