The NBP partially retraced Tuesdays gains, with the Spot market declining by 4% day on day

Gas Market

On Wednesday NBP prices retreated from the previous day’s highs with the Spot and curve contracts all shedding value. LNG risk was still a focus of curve contracts as the market remained tentative to the latest developments at Freeport LNG, with Train 1 expected to restart this week, but actual loadings are not yet underway. Traders also reported a seven-to-eight day outage at another U.S. LNG facility at Corpus Christi, but the impact of this is expected to be minimal. The front month contract shed 2.48p day on day to close at 73.77p per therm. Flows from Norway were stable even though a small unplanned outage at the Easington Dimlington terminal was reported in the morning. The healthy supply scenario was reflected in the system length throughout the day which fed into the downside on the prompt. The Spot closed the day at 73.50p per therm, down 4% day on day.  

Power Market

Losses across the NBP yesterday weighed on Baseload contracts, while a downward revision to wind output levels for the rest of the week and next held up the prompt. Near curve contracts averaged day on day losses of £1.62/MWh with the front winter contract shedding just under £1.00/MWh to settle at £83.25/MWh. The 1.4 GW UK-Denmark interconnector is operating at reduced capacity today which may feed into further support on prompt contracts. European carbon prices edged lower on Wednesday reflecting the weakness seen across gas and power markets. The spot EUA fell to its lowest level in 3 weeks to finish at €65.35, down €1.52/MWh day on day. UK Allowances were also in decline, with Dec-24 shedding £0.36 to settle at £40.89/MWh.  

Oil Market

Crude oil prices edged up on Wednesday, a day after front month Brent reached a one month low. A bigger-than-expected decline in U.S. crude stockpiles and a weaker dollar overshadowed signs of weakening demand in China. According to the U.S. Energy Information Administration (EIA) crude inventories were down 4.9 million barrels, resulting in a third consecutive week of declines. A softer U.S. dollar can boost demand levels by making commodities such as oil cheaper to buy for holders of other currencies. Rising geopolitical risk also played into the upside as a Liberian oil tanker was assessing damage and investigating a potential oil spill after it was attacked by Yemen’s Houthis in the Red Sea recently. Front month Brent increased by $1.35 day on day to settle at $85.08 a barrel.  

Markets this morning

NBP near months are trading at a premium to Wednesday’s close, with the front month last changing hands at 74.56p per therm, up 0.79p. Prompt activity is yet to get going, although short-term fundamentals remain weak. Flows from Norway and the UKCS are higher day on day while gas for power demand has fallen. The latest temperature forecast has been adjusted up, which will also feed into lower demand for gas. Operations at Freeport LNG’s Train 1 have ramped up, but no loadings have been reported as yet. Crude oil markets continue yesterday’s upward trajectory this morning with front month Brent last trading at $85.22 a barrel, up 14 cents on the previous close.