Gas Market
Thursday’s gas market development was almost a declaration that price volatility is here to stay. In almost a complete replication of Tuesday’s price movements, the markets opened in negative territory with all contracts trading below, and substantially so in some cases, Wednesday’s close for much of the day before a late rally saw prices move sideways. The front month traded almost 11p lower at 114.85p/th before closing at 123.63p/th. Prices for Q1-24 increased marginally despite the fundamentals remaining strong, as minds now turned to the risk of a cold winter, and particularly the back half of winter. Despite storage facilities across Europe almost at capacity, the market is unsure what the draw on stock will be if there is a cold winter ahead, and how that could impact supplies for February and March 2024. The risk of escalation in the Middle East, and the potential impact on LNG from the area is also a contributory factor.
Power Market
Near curve contracts fell across the session as GB baseload contracts took direction from their NBP gas counterparts. November-23 fell by £3.50/ MWh closing at £108.25/MWh. On the curve, prices bucked the gas trend and took direction from a weak UKA carbon allowances market. UK carbon certificates for Dec-23 and Dec-24 fell by 4.4% from Wednesday’s close. Day-ahead baseload spark spreads remained weak due to the prevalence of wind on the system. Wind generation remains at 20% above seasonal norms which helped push the prompt power contracts lower.
Oil Market
Oil prices edged higher on Thursday despite the lifting of some restrictions on Venezuelan oil by the U.S. Front month Brent crude oil prices increased by 88 cents, closing at $92.38 a barrel. The ruling government of Venezuela has reached an agreement with opposition parties to hold fair elections in 2024, which led to the U.S. lifting the sanctions. The result of the easing of restrictions could lead to an increase in global oil supply over the coming months. On the opposite side of the coin, keeping prices elevated is the sustained reduced production by Saudi Arabia, with Japan urging them and other oil producing nations to increase global supply in order to stabilise prices, and in turn global economies. Additionally, it almost goes without saying, the continuing Israel-Hamas war is supporting prices with the risk of escalation in the Middle East still a risk.
Markets this morning
Oil prices edged higher on Thursday despite the lifting of some restrictions on Venezuelan oil by the U.S. Front month Brent crude oil prices increased by 88 cents, closing at $92.38 a barrel. The ruling government of Venezuela has reached an agreement with opposition parties to hold fair elections in 2024, which led to the U.S. lifting the sanctions. The result of the easing of restrictions could lead to an increase in global oil supply over the coming months. On the opposite side of the coin, keeping prices elevated is the sustained reduced production by Saudi Arabia, with Japan urging them and other oil producing nations to increase global supply in order to stabilise prices, and in turn global economies. Additionally, it almost goes without saying, the continuing Israel-Hamas war is supporting prices with the risk of escalation in the Middle East still a risk.
23 October 2023
