Crude oil prices settled higher on Thursday snapping a four-day losing streak

Gas Market

It was another day where early gains to the NBP curve were reversed through the session while weak fundamentals weighed in the afternoon.  Premium had been added over two weeks ago when Ukraine attacked the town of Sudzha in the Kursk region of Russia.  This threatened the gas interconnector in the area which supplies around 40mcm per day to Europe transiting through Ukraine.  Gas prices increased by over 10.00p per therm at the time in what was always seen as an overreaction given European gas demand averages around 1,200mcm and if the interconnector went down the 40mcm of gas could be recouped from elsewhere in Europe.  This premium has now been fully unwound and at the close yesterday, the front month settled 1.13p down at 87.52p while the Winter product settled at 102.33p. An outage at the IFA2 power interconnector between the UK and France provided support to the Spot and Day ahead as demand picked up.

Power Market

Wind generation remained robust on Thursday, however, an unplanned outage on the IFA2 interconnector limited imports from France yesterday. Two nuclear power plants with capacity of over 1,200MW will be offline for operational issues until well into September. Prompt prices tick up a little with the baseload for the Day ahead product adding £3.31/MWh to settle at £33.75/MWh. The contract is averaging £57.99/MWh for the month so far. GB baseload futures took the lead from the NBP futures curve and near months declined by an average of 1.7% or £1.45/MWh. Carbon prices eased also with the Dec-25 contract for EUAs down by €1.03 to €74.07 per tonne. UKAs eased by an average of 1.5% or £0.63 per tonne.    

Oil Market

After struggling to find direction on Thursday morning, crude oil prices took support from hopes of a confirmation of an interest rate cut and this week’s drop in crude oil inventories.  The minutes from the latest U.S. Federal Reserve’s meeting indicated most officials were behind the introduction of the first interest rate decrease in September. The Chair, Jerome Powell, is to speak at the Jackson Hole banking conference on Friday and it is hoped that he will indicate if the cut will be a half or a quarter of a percentage point.  A weaker dollar provided support to oil prices yesterday too while a greater than expected fall in crude oil and distillate stocks last week also weighed.  At the close, Brent for October delivery was up $1.17 a barrel to $77.22 a barrel.  

Markets this morning

The NBP curve opened higher by about a half a penny but has reversed back to last night’s close. Latest trades for the front two months have gone through at 87.40p and 90.37p per therm respectively. Contracts are flipping between losses and gains with direction for the day not obvious at this stage.  The Winter contract last exchanged at 102.50p and other futures that have traded are within +/- 0.25p of yesterdays close.  Contracts on the prompt screen are still to get going, but the GB gas system is comfortable with demand pitched at 145mcm for today. Norwegian nominations through Langeled are at 53mcm this morning.