Prices along the gas curve stepped higher supported by farmer’s protests in Belgium and the pricing in of the delay in LNG due to the Red Sea attacks

Gas Market

As trading began on the NBP it appeared as if Tuesday would be a repeat of the last 4 days of trading as prices appeared to be once again rangebound, effectively moving sideways over the last number of sessions. In its final session before expiry the Feb-24 contract fell initially to 67.80p/th but increased marginally by lunchtime to trade just above 70.00p/th. However, prices were soon trading higher on the back of the farmers protests in France spreading to Belgium and the creation of a blockade at the Zeebrugge port. Zeebrugge is a key port for LNG deliveries into Northwest Europe while it is also where the Interconnector between the UK and the EU makes land on the continent, with speculation in the market that the protests could hamper workers and LNG cargos. As a result, the front month peaked to 73.65p/th before the contract expired at 73.09p/th.

 

Power Market

GB baseload day ahead power fell to £63.65/MWH on Tuesday bucking the trend on the curve. Wind generation is expected to be 20% above seasonal norms, while a slight uptick in temperatures is also dampening demand. Also helping to stifle prompt power prices is the continued ramp up of GB’s nuclear fleet with three remaining offline. On the curve prices took their lead from increasing NBP gas prices and steep rise on the UKA Dec-24 contract. In its penultimate session Feb-24 stepped £2.58 higher closing at £68.20/MWh. Further along the curve the rebound on UKA, as well as the EUA, Dec-24 contracts contributed to the bullish outlook. Carbon prices increased tracking the wider energy complex higher.

 

Oil Market

Oil prices shook off Monday’s declines to post moderate day on day gains. Tensions in the Middle East were again heightened following comments from Biden that he had reached a decision on how to react following the attack on a US base in Jordan. The Brent front month price closed up a mere 0.6% being assessed at $82.87/bbl. Other contributing factors to the halt included a decline in the value of the dollar as the market expects a change to US interest rates to be announced soon. Continued attacks on Russian oil infrastructure are also concerning the market with reports of reduction in some exports of oil products from the country. Saudi Aramco announced it is dropping oil production capacity from 13 million barrels a day to 12 million barrels a day, although it may say more about expected demand rather than the effect on tightening supplies.  

Markets this morning

Gas contracts are thinly traded so far this morning, but any traded contracts have all stepped higher once again. Despite demand decreasing due to increased wind generation and the resulting fall in gas for power, the UK gas system is once again undersupplied with LNG send out down by 34%. The new front month contract Mar-24 last exchanged hands at 73.00p/h, an increase of over half a penny. Oil prices are in decline this morning due to manufacturing data from China contracting for the fourth month in a row. China is the world’s largest importer and second largest consumer of oil and a key indicator for global demand