Wholesale gas prices continued to ease on Friday

Gas Market

Wholesale gas prices continued to ease on Friday as the front months on the NBP declined by an average of 2.00p. Over the week the May contract declined by 8.18p.  Further out, losses were more muted on the day with risk premium being pushed out to the winter and beyond as the summer-24 contract was up 3.57p week-on-week.  Prompt prices were down marginally on the day despite a short gas system on Friday.  The spot closed at 100.05p, down a penny while the day ahead yielded 2.25p to close at 98.25p. In an effort to secure supplies for the winter the Dutch government announced a subsidy scheme to fill the Bergermeer storage facility, with a target of 90% set for the end of the summer.

Power Market

GB baseload futures continued to come under pressure from falling gas prices on Friday.  The front month settled £2.15/MWh down at £101.00/MWH and shed £8.75/MWh week-on-week.  Weaker carbon prices also weighed on the curve on the day as the spot price for EUAs shed 55 cent to close at €91.15 per tonne. The day ahead product for baseload power eased on Friday as the NBP declined and temperatures for the week were revised higher.  The contract settled at £100.81/MWh, down £15.04/MWh. The contract could find support with wind generation forecast to ease further from Monday, dropping below 3.0GW.

 Oil Market

Crude oil prices recorded their fourth week of gains on Friday as Brent settled $1.32 a barrel higher over the week or just 22 cents up on the day.  The International Energy Agency, based in Paris, forecast that global demand could climb by 2m barrels per day in 2023.  The report pitches demand growing to a record 101.9m barrels per day mainly due to a recovery in China following the lifting of covid-19 restrictions.  They also pointed out that the cuts to production introduced by OPEC+, a further 1.16m bpd, will tighten the market and could possibly hurt global economic recovery.  The U.S. active rig count was down for the third week with 2 rigs less active last week leaving the total at 588, the lowest since last June.

Markets this morning

Futures on the NBP curve opened firmer this morning, but latest trades for the front months have seen prices ease back off their morning highs.  The front month, May, last traded at 99.50p, up by 1.04p from Fridays close.  The longer curve has yet to trade but the bid ask price spreads are hinting at a slight increase upon opening.  On the prompt, the day ahead product last traded at 100.00p on the nose and there’s very little activity elsewhere on the prompt board.  Crude oil prices are down with Brent for June 23 cents a barrel lower at $86.08 a barrel.    

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