An average fall of 2.50p per therm was recorded by near NBP futures

Gas Market  

On Wednesday we witnessed the near NBP curve edge higher by around a penny and a half before contracts tumbled into negative territory during the afternoon session. Significant losses were posted on Tuesday, and it was no surprise to see minor gains after market opening as traders took advantage of the dip in prices. While this encouraged contracts at the front to increase, there was some oscillation at or around Tuesday’s close before weak fundamentals took over once more in the second half of play.  At the close, the front month was 2.81p per therm lower while the Winter-2024 contract shed 2.32p bringing the total loss for this week to 7.49p. These are back to the price levels seen before Ukraine’s incursion of the Kursk region in Russia a couple of weeks ago. The Spot and Day ahead settled marginally lower yesterday while the Balance of month product eased by 2.45p despite forecasts for less wind generation next week.  

Power Market

Near GB baseload power futures tracked movement on the NBP curve yesterday as the from month settled £1.90/MWh lower.  Contracts from the Winter out were marked down too but losses were more modest. Carbon EUA contracts for Dec-24 and Dec-25 fell by around 1.0% or €0.75 per tonne likely taking their lead from the late decline in gas prices in the afternoon.  UKAs settled with losses of around £0.20 per tonne. Wind generation remained the dominant player in the GB power stack yesterday with levels exceeding 16.0GW which was over 50% of generation on the day.  Natural gas has been relegated down the stack of late and its contribution was matched by solar generation yesterday.  

Oil Market 

Demand for U.S. crude oil was dealt another blow on Wednesday after a revision of the total numbers of employed reported in the year to March 2024 was trimmed by over 800,000. This raised concerns that the U.S. economy is not as strong as originally thought and posed fresh doubts for the possible interest rate cut widely expected in September. A lowering of interest rates decreases the cost of borrowing and can boost the economy, which elevates oil demand.  With talks between Israel and Hamas stalling, the U.S. President, Mr. Biden, is planning a call to his Israeli counterpart to keep hopes of a ceasefire alive.  The EIA reported a draw of 4.6m barrels in America’s crude oil reserves which limited the decline to $1.15 a barrel for Brent yesterday.  

Markets this morning

Crude oil prices are trading in a tight range of less than a dollar this morning as the market gets to grip with the latest blow to demand.  A fall in U.S. inventories of crude oil and gasoline stocks last week seems to be the only positive for prices as Brent is flat at $76.08 a barrel.  In the natural gas markets, yesterday’s decline has been halted and near curve contracts for the NBP are trading slightly higher with September last going through at 89.63p.  Trading for the prompt has been light do far and the GB gas system is operating with a slight surplus against demand of 145mcm for today.