For the second successive session there was a sense of calm
For the second successive session there was a sense of calm on the NBP wholesale gas market as prices on the curve hovered close to Monday’s close. March, the front month, was the only contract to make a gain session on session and even so at 0.65p to say it was modest is an understatement. Closing at 129.59p per therm, March was influenced by long range forecasts of cool temperatures and by an uptick on the prompt driven by low wind and a short system. Mild temperatures helped to keep a lid on any prompt gains as the overarching theme of a mild winter continued. On a European context Dutch gas operator Gasunie announced that it is to continue exploring options for expanding its existing LNG terminals with some expansion in place by the end of the year. This news could prove to be a positive indicator for Winter 23 to be well supplied.
Curve contracts experienced a combination of gains and losses
Curve contracts experienced a combination of gains and losses, as a bullish gas market provided support while carbon markets faced losses after the European parliament’s approval of the REPowerEU package. The front-month contract for UK power rebounded after reaching its lowest level since September 9, 2021, due to predictions of lower temperatures and decreased wind output. However, the day ahead contract decreased in value as stronger wind generation, averaging 11.2GW, was expected, which is 6.7GW higher than Tuesday’s average output. The day ahead contract was assessed at £132.50/MWh a decrease of 5% due to favorable wind conditions.
On Tuesday, the price of crude oil decreased
On Tuesday, the price of crude oil decreased from $86.61 per barrel to $84.49 per barrel, before recovering to close the session at $85.58. The decrease in prices was mainly due to the U.S. government’s announcement of additional crude oil releases from its Strategic Petroleum Reserve. This price decline was further amplified by U.S. inflation data, despite a slowdown in the annual rate of price increases. While U.S. consumer prices experienced acceleration in January, the annual increase was the least significant since late 2021, which could result in a less aggressive approach to interest rate hikes by the U.S. Federal Reserve.
Carbon EUA’s and UKA’s all lost value on Tuesday following the approval of REPowerEU measures that will help speed up the green transition and tackle energy poverty
EUAs are continuing yesterday’s trend with further loses
A balanced system this morning couldn’t temper the rebound from the falls over the last couple of days as March gains almost 4.50p this morning. It is a similar story across the limited number of curve contracts that traded this morning. The prompt is split on where to go, with day ahead likely to open in positive territory having not traded yet, while within day gas is down. EUAs are continuing yesterday’s trend with further loses on 2023 and 2024 certificates. Brent front month has also continued its downward trajectory triggered by an industry report that indicated healthy supplies in the U.S. and worries about weaker fuel demand due to the economic outlook.
15 February 2023
