Gas Market
Following the long weekend in the UK the NBP gas market opened strongly on Tuesday and continued higher throughout the day. The bullish tone was set early following the attacks by Russia on Ukrainian energy infrastructure over the weekend and the confirmation that a ceasefire agreement would not be reached in the Middle East. The front month contract increased to an intraday high of 94.15p/th buoyed by news from Australia that one of the two trains at the Ichthys LNG plant would be offline until the end of September. With large scale scheduled maintenance due to take place on Norwegian gas assets from the end of this week, the NBP is even more sensitive to global LNG price movements and cargo availability. The front month eventually settled at 93.25p/th an increase of 4.62 pence, while the front season increases by 3.08p to 105.90p/th.
Power Market
GB Baseload power prices tracked bullish movements on the NBP higher, shaking off a fall on the UKA allowance market. With the September 2024 contract approaching expiry at the end of the week the contract increased by £3.63/MWh to close at £80.25/MWh. Despite the increase over the last two sessions, the 5-day move is negative across the power curve. Day ahead baseload increased by 25% buoyed by falling renewable generation and increasing day ahead gas prices.
Sumitomo Electric Industries has confirmed to the market that it has completed the Greenlink Interconnector between Ireland and Wales. This interconnector is engineered to enable electricity flows in both directions, dynamically adjusting to the changing supply and demand in each country.
Oil Market
Global oil prices declined on Tuesday having made large gains on Monday. Brent crude increased by $2.41 on Monday, closing at $81.43/bbl, due to the threat of a loss of Libyan oil supplies. Authorities in the east of the country where nearly all of Libya’s oil fields are situated threatened to cease production following tensions over leadership of the country’s central bank. However, prices declined on Tuesday as the market reassessed the risk to global supply levels. Libya’s internationally recognised government in Tripoli failed to confirm the cut to oil production. In addition to the lack of confirmation was concerns for a fall in global oil demand, particularly diesel, which also weighed on oil prices as the Brent contract for delivery in October retreated below $80 to $79.55/bbl.
Markets this morning
The UK gas grid is well supplied this morning with the system balanced. Flows through the Langeled pipeline are down by 5mcm ahead of the pipeline’s scheduled maintenance next week. The spot market has yet to trade on any of the exchanges at this stage, however indicative bids and offers has the day ahead contract priced in line with Tuesday’s settlement. The front month and front season are both trading flat to yesterday’s close. Crude oil prices continue to fall as concerns for global demand continue to outweigh any concerns for global supply despite the risk of Libya ceasing production.
28 August 2024
