Gas Market
On Friday, the UK gas market showed relatively subdued activity, but contracts managed to end the week with gains. Notably, the recurring trend of risk premiums gradually accumulating at the front of the curve persisted, with the front-month contract climbing by 2.87p to settle at 82.14 pence per therm. Meanwhile, the Winter 23 contract concluded the session at 124.32p, a 4.04p discount relative to the Summer 24 contract. Recent trading sessions have failed to establish a clear and distinctive pattern. Instead, contracts have displayed a narrow trading price range. Limited price movements, mirrors the underlying robustness of near-term fundamentals, especially as we approach the winter season. European aggregate storage levels are currently at 93% fullness. NBP prompt contracts also moved higher on Friday, with the Day ahead product closing at 92.00p per therm.
Power Market
Prices along the GB baseload power futures curve pushed higher during Friday’s session, mirroring the movement in the UK gas market. However, unlike the gas market the front summer contract remains at a discount to the Winter-23 contract, closing at £109.50/MWh. Despite prices moving higher the gains were fractional, with the front month October gaining £0.95/MWh to settle at £85.70/MWh. Baseload for day ahead delivery moved in the opposite direction to the curve, moving lower during Friday’s session, closing at £76.82/MWh. The EUA carbon market also shed value on Friday, as the Dec-23 contract ended the day at €82.10 a tonne, down €0.85.
Oil Market
Brent crude front month peaked at $94.63 a barrel during Friday’s session, before falling back to end the session at $93.93, a 10-month high. The recent upward push has taken direction from healthy macroeconomic data from China, which indicates the world’s second largest economy is showing signs of stability. This positive news alongside tight supply on the back of planned production cuts by Russia and Saudia Arabia is supporting the bullish sentiment. Adding a layer of complexity to the supply concerns, Libya has recently emerged as a focal point as the nation has been grappling with the devastating impact of severe flooding, inflicting substantial damage upon its critical oil infrastructure. Libya stands as a significant player in the global oil supply chain, contributing one million barrels per day.
Markets this morning
This morning, the UK gas market commenced trading in negative territory, with the front-month contract October currently trading at 89.99p, marking a 2.15p drop from Friday’s close. A similar pattern of losses is evident in the Winter-23 contract, which is down 2.32p after last trading at 122.00 pence per therm. Although the gas system has opened slightly undersupplied, with a demand forecast of 124MCM for today, it’s worth noting that the UK is anticipated to inject gas into storage and export through the IUK interconnector. Additionally, there’s a one-day delay in the Norwegian gas field Troll’s return to full capacity. Brent crude front month last traded at $93.98 a barrel.
18 September 2023
