Gas Market
On Friday NBP prompt contracts traded relatively flat against their previous close with greater losses experienced further out along the near curve. A rise in gas for power demand levels as well as a downward revision to wind generation forecasts for this week muted any short-term downside stemmed from a well balanced gas system. The Day ahead contract closed the day up by 0.35p to finish at 78.05p per therm, while the Spot traded down by 0.60p to settle at 77.50p per therm. The near curve exhibited losses across the board due to stable Norwegian imports and a relatively robust LNG arrival schedule for Europe. The front month contract closed the week at 77.27p per therm, down 0.71p day on day, while the front winter contract finished at 97.86p per therm, down just under 1p day on day.
Power Market
GB Baseload prompt contracts made gains on Friday, in contrast to products further out. Wind power levels for the coming week were revised down ahead of the weekend, which likely provided the short-term price support. The Day ahead contract rose by £20.07/MWh to finish at £80.47/MWh, the highest level in almost 2 weeks. Losses across the NBP and UKA markets pressured curve prices down, with the front month falling by £1.13/MWh to settle at £69.13/MWh, while Winter-24 traded down by £1.08/MWh to close at £88.10/MWh.
A landslide election result for the left-leaning Labour Party in the UK helped UK Allowances to ease in contrast to the direction taken by the EUA market. Dec-24 UKA fell by £1.20 day on day to close at £45.40 a tonne.
Oil Market
Crude oil markets were volatile on Friday with front month Brent maintaining a level above $87.00 a barrel for much of the session. Strong summer fuel demand, potential supply disruptions in the Gulf of Mexico due to adverse weather and expectations of a fall in Russian crude supply levels combined to provide the upward pressure. However, gains were largely wiped out as news reached the market of a potential Gaza ceasefire and hostage release deal. With negotiations set to resume this week, this could point to an easing of geopolitical tensions in the Middle East and a reduction of risk premiums. Front month Brent settled at $86.54 a barrel, a decrease of $0.89 day on day. The West Texas Intermediate (WTI) front month also settled lower day on day to close at $83.16 a barrel.
Markets this morning
The GB system has opened long this morning despite an increase in demand. Higher week on week demand from the power generation sector due to significantly lower renewable penetration has caused the increase in gas demand levels. Trade activity on the prompt market is quiet this morning with contracts there yet to trade hands. Further out, the NBP front month contract was last observed at 77.76p per therm, a slight increase of 0.49p on Friday’s close. In crude oil markets, front month Brent is trading slightly higher than its Friday’s close also, with the increased likelihood of a September interest rate cut in the US capping losses from the heightened prospect of a ceasefire in Gaza.
08 July 2024
