Prompt prices fell significantly on Wednesday

Gas Market  

Early gains to the near curve of the NBP were pared back over the rest of the morning and contracts oscillated between gains and losses before pressure from the prompt weighed later.  While the conflict intensified in the Kursk region, gas flows from Russia to Europe at the border town of Sudzha remained around 40mcm yesterday. Forecasts for renewables to account for around 50.0% of GB power generation on Thursday pressured the prompt as the Spot and Day ahead products declined by 4.45p and 5.10p respectively.  The Day ahead is averaging 81.69p for the month so far and this represents a 14.5% discount to the front month, September, which settled at 94.19p having eased by 1.75p day-on-day.  

Power Market

The late decline in near futures on the NBP came a little too late to pressure the GB power curve on Wednesday.  The September contract settled just £0.25/MWh down on the day while contracts covering the winter period recorded gains of up £1.30/MWh yesterday.  An increase in carbon on the day also propped up baseload futures yesterday as UKAs added 1.2% while EUAs settled an average of 0.6% higher. Forecasts for high performance from renewables in the power stack pressured the prompt yesterday.  Baseload for the Day ahead shed £29.23/MWh to settle at £50.95/MWh which brings the average for the month so far to £62.58/MWh.

Oil Market

A surprise build in U.S. crude oil reserves along with slightly easing fears of an escalation in the Israel Hamas war weighed on crude oil prices on Wednesday.  The market had expected a fall in U.S. crude oil stocks to be confirmed after the industry group, American Petroleum Institute, pointed to a drop of 5.2m barrels based on its own surveys earlier in the week. However, the Energy Information Administration posted official figures yesterday which has reserves at 430.7m barrels which is an increase of 1.4m barrels over the previous week.  The latest increase snapped a six-week run of declines as the summer driving season draws to a close in the U.S. Ceasefire talks are to continue on Thursday in Qatar although without a Hamas representative present, they are unlikely to narrow the gap between the two sides.  

Markets this morning

The NBP futures market is struggling to find direction this morning with early trades for the front month and season flipping between gains and losses.  The September contract last exchanged at 94.80p having traded between 93.01p and 95.07p so far. The Winter-24 contract is 0.72p higher at 110.75p.  Prompt prices are stuck on last night’s close save for the weekend contract which is almost a penny lower.  In the crude oil markets, Brent has ticked up this morning with the latest trade going through at $80.26 a barrel, an increase of 50 cents on last night’s close.