Average gains of 2.84p per therm were recorded by the near curve on the NBP

Gas Market

Geopolitical tensions continued to support gas markets on Thursday while rising LNG demand in Asia also added to the upside.  NBP futures rose for the fifth day as contracts for the near curve posted average gains of 2.84p per therm or just over 3.0%. Concerns that the war in Gaza will spread in the region and impact gas supplies have increased this week. Meanwhile heatwaves in Japan and South Korea have added to LNG demand as cooling load rises and the JKM for the front season has climbed by over 6.5% this week. While LNG shipments may be directed to the East, there are four laden vessels on route to the Netherlands while one LNG cargo is confirmed for the UK so far this month.  Supplies remain healthy with European storage levels reaching 85% of capacity on Wednesday, which is well ahead of target.  

Power Market

GB baseload futures tracked the movement on the NBP curve yesterday while higher carbon prices also added to the mix.  Another volatile session for gas prices left power contracts at the front of the curve an average of £2.40/MWh higher yesterday. The new front month, September, lowered the average gain as the contract only marked £1.60/MWh higher. Baseload for the Day ahead fell by over £7.00/MWh yesterday as wind speeds are expected to rise on Friday. Carbon EUAs added around 2.7% yesterday as the gains triggered more buying in the market, at the close the Spot prices was €1.88 higher at €70.07 per tonne.  UKAs settled 5.0% higher posting gains of £1.97 per tonne for Dec-24 and Dec-25 contracts.

Oil Market

  The bearish sentiment returned to the crude oil markets on Thursday and Brent declined by $1.20 a barrel.  Concerns of supply disruption had increased on Wednesday after the Hamas leader was killed in a targeted attack in Tehran. The markets feared a further retaliation by Hamas could cause disruption to oil supplies in the region, but this failed to materialise yesterday and some of the premium added during Wednesday’s session was unwound. A strengthening dollar also weighed in to the downside for crude oil prices yesterday, the greenback reached its highest point against the Euro in almost a month.  Demand concerns in China continue to cause anxiety with latest manufacturing activity data falling to a five-month low last month while OPEC+’s output policy remains unchanged and the group still intend to start unwinding cuts to production in October.  

Markets this morning

After a week of significant gains NBP futures have opened softer this morning but losses are modest.  The front month, September, is almost a penny down at 89.25p on the latest exchange. A little further out, the Winter-2024 contract last traded at 102.86p which is 0.36p down on last night’s close.  Prompt prices will likely open flat or slightly lower, but no deals have been completed at the time of writing.  The increased wind generation has dented gas demand this morning and the gas system is showing a surplus of 8mcm.  In the crude oil markets, Brent is 30 cents up at $79.82 a barrel.