NBP Gas prices tumbled in afternoon trading on Tuesday

Gas Market

NBP Gas prices tumbled in afternoon trading on Tuesday as the front month declined by 4.67p/th from Monday’s settlement. Closing at 91.46p/th the September contract had traded as high 97.19p/th, before sliding to a low of 90.75p/th just prior to settlement. Market fundamentals seem to have finally exerted some influence over the NBP and European gas markets. Despite ongoing conflict in Russia in the vicinity of a gas interconnection point, gas continues to flow unabated. European gas storage sites are 90% full two and a half months ahead of schedule, while storage in the UK is 79% full. Positive news emanating from Middle East indicating a ceasefire, although still remote, is closer than any time in the 10-month long Israel Hamas war has seen some of the risk backed support for prices waver slightly.

Power Market

The GB baseload day ahead contract declined by £14.50/MWh as the GB power system was well supplied by strong wind generation. The day ahead contract fell to £37.50/MWh as the remnants of Hurricane Ernesto saw wind speeds increase across GB reducing the need for gas fired generation. On the forward curve the market declined in the afternoon tracking the decline on the NBP gas hub as Winter-24 fell to £92.25/MWh. EUA carbon prices moved sideways on Tuesday, with the Dec-24 contract trading in a tight €72.65 to €74.75 per tonne range. The allowances market shook off the weakness on European gas hubs as it appears reluctant to release the risk premium built up over recent weeks.

Oil Market

Crude oil prices fell for the third consecutive session as Chinese economic weakness and progress on truce talks between Israel and Hamas weighed on global oil contracts. The Brent Crude front month fell by 46 cents to $77.20/bbl while the West Texas Intermediate shed 49 cents to close Tuesday’s session at $73.17/bbl. News late Monday night that Israel had accepted a bridging proposal that is aimed at overcoming obstacles that previously prevented a ceasefire eased supply concerns for oil originating in the Middle East. In China the country’s economy stuttered further with the price of new homes falling at their fastest pace in nine years, while the slowing of industrial output, rising unemployment and falling refinery activity also weighed heavily on crude demand and oil prices.  

Markets this morning

Following Tuesday afternoon’s sell off rather unsurprisingly the NBP gas market is trading marginally higher in early trading. The September contract last exchanged hands at 92.65p/th a gain of 1.19 pence. The UK gas system is well supplied and is currently marginally long, although gas for power is slightly higher as wind speeds begin to decline. On the curve the winter-24 contract is also trading at a premium to last night’s close. Following three days of decline crude oil prices are steady this morning, trading on a par to Tuesday’s closing assessment. Brent for delivery in October last traded at $77.26/bbl, a mere 6 cents higher than yesterday’s settlement.