The August-24 contract expired at its highest assessed level since the end of June at 80.50p/th

Gas Market

NBP gas prices increased in late trading yesterday as all contracts moved into positive territory having spent much of the session just below or at Monday’s close. The August contract expired at its highest level in a month at 80.50p/th as a multitude of events conspired to push prices higher. Tensions in the Middle East were one contributing factor as the market waited on the next steps in the conflict. Also impacting on prices was a fall in wind generation that increased demand for gas for power generation. Low wind speeds are expected to last into next week helping to keep gas demand elevated until then. And the final bullish factor was the unexpected extension of maintenance at the Karsto processing plant in Norway until the 6th of August.  

Power Market

The majority of GB baseload power futures tracked gas prices higher with minor gains made from September-24 onwards. The front month tracked the early morning losses on the NBP and shook off the late rally to post a day-on-day loss of £0.35/MWh as the August contract approaches expiry. On the prompt the forecasted fall in wind generation saw the day ahead contract add £1.00/MWh, while the impact of the lack of wind was more greatly felt on the weekend contract which increased by 16.24% or £9.50/MWh. The Dec-24 EUA contract tracked movements on European gas markets lower in early trading. However, despite the rally on gas markets, the EUA contract failed to move into positive territory closing at €68.65/tonne.

Oil Market

Concerns for oil demand in China pressured contracts on Tuesday as crude prices edged lower for the third consecutive session. The September Brent crude oil contract fell by 1.4% to $78.63/bbl and West Texas Intermediary declined to $74.73/bbl with both contracts at their lowest point since the 5th of June. Chinese manufacturing activity shrank for the third month weighing on the demand in the world’s largest importer of oil. Chinese leaders have vowed to increase support, but investors are sceptical of the impact as a recent policy meeting merely reiterated existing goals. OPEC+ are due to meet this week with the expected unwinding of production cuts high on the agenda, which is also weighing on crude prices, although no immediate change is expected.  

Markets this morning

Curve contracts on the NBP are continuing their upward trajectory following events in the Middle East over night that could escalate matters further. The new front month contract, Sep-24, last traded at 86.77p/th down from the early morning high of 87.24p/th. Trading is thin on the prompt with no trades confirmed at this early stage, although indicative bid and offers suggest the next trade on Day ahead will be completed at the 80p/th level. Crude oil is up by almost $2.00/bbl as the market becomes less concerned with falling Chinese demand, and more preoccupied with events in the Middle East over night that has seen tensions in the region increase.